Ivan Izo created a corporation providing legal services, Ivan Izo Inc., on July 1 2001. On July 31 the balance sheet showed: Cash $4,000; Accounts Receivable $1,500;

Supplies $500; Office Equipment $5,000; Accounts Payable $4,200; Common Stock $6,500;

and Retained Earnings $300. During August the following transactions occurred:

1. Collected $1,400 of accounts receivable.

2. Paid $2,700 cash on accounts payable.

3. Earned revenue of $6,400, of which $3,000 is collected in cash and the balance is due in September.
4. Purchased additional office equipment for $1,000, paying $400 in cash and the balance on account.
5. Paid salaries $1,500, rent for August $900, and advertising expenses $350.
6. Declared and paid a cash dividend of $550.
7. Received $2,000 from Standard Federal Bank; the money was borrowed on a 4-month note payable.
8. Incurred utility expenses for month on account, $250.
Instructions

(a) Prepare a tabular analysis of the August transactions beginning with July 31 balances.
The column heading 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 August, a retained earnings statement for August, and a classified balance sheet at August 31.