T-account entries and balance sheet preparation. Joshua Blacksmith plans to open a bakery on September 1, specializing in natural-grain breads, pastries, and other baked goods. He will operate the bakery under the name of Blacksmith's Bakery, Inc. The cash account during August showed the following:

In addition to the cash transactions above, you learn the following from Joshua Blacksmith:
(9) Baking and packaging supplies costing \(\$ 240\) were purchased on August 28 but not paid for by the end of August.
(10) A bill for services rendered in painting the Blacksmith Bakery, Inc., sign in the amount of \(\$ 750\) remains unpaid at the end of August.
(11) The firm has received an insurance premium notice totaling \(\$ 390\) for coverage beginning September 1.

a. Enter these transactions in T-accounts. Indicate whether each account is an asset, a liability, or a shareholders' equity item. Cross-reference each entry to the appropriate transaction number.

b. Prepare a balance sheet for Blacksmith's Bakery, Inc., as of August 31 .

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Date Cash Receipts Description Amount (1) August 10 Investment made by J. Blacksmith for 2,000 shares of $1-par value common stock $2,000 (2) August 20 Advance from local grocery store for order to be shipped September 1...... 220 (3) August 25 Cash Disbursements (4) August 12 (5) August 15 (6) August 18 (7) August 25 (8) August 30 Grant received from local chamber of commerce to encourage small business... Expenditure made for a sign that Blacksmith's Bakery, Inc., will place outside its bakery... Cost of used baking ovens from a bankrupt restaurant ... Rent prepaid on baking and retail space for the month beginning September 1..... Expenditure for baking and packaging supplies. Expenditure for advertising to appear in local newspapers in September.... 500 (450) (580) (800) (390) (120) $ 380