Donna Corso opened Corso Company, a veterinary business in Hills, Iowa, on prepare an income statement, August 1, 2001. On August 31 the balance sheet showed: Cash $9,000; Accounts Receivretained earnings statement, able $1,700; Supplies $600; Office Equipment $6,000; Accounts Payable $3,600; Common and balance sheet. Stock $13,000; and Retained Earnings $700. During September the following transac-

(SO 1) tions occurred:

1. Paid $3,100 cash on accounts payable.

2. Collected $1,300 of accounts receivable.

3. Purchased additional office equipment for $4,100, paying $800 in cash and the balance on account.

& . Earned revenue of $8,900, of which $2,500 is paid in cash and the balance is due in October.
. Declared and paid a $600 cash dividend.
. Paid salaries $700, rent for September $900, and advertising expense $300.
. Incurred utility expenses for month on account, $170.
. Received $7,000 from Hilldale Bank; the money was borrowed on a 6-month note payable.
Instructions

(a) Prepare a tabular analysis of the September transactions beginning with August 31 balances. The column headings should be: Cash + Accounts Receivable + Supplies +
Office Equipment = Notes Payable + Accounts Payable + Common Stock + Retained Earnings. Include margin explanations for any changes in Retained Earnings.

(b) Prepare an income statement for September, a retained earnings statement for September, and a classified balance sheet at September 30, 2001.
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