Analyzing Transactions}
Luis Madero, after working for several years with a large public accounting firm, decided to open his own accounting service. The business is operated as a corporation under the name Madero Accounting Inc. The following captions and amounts summarize Madero's statement 
of financial position at July 31, 2018:

The following events occurred during August 2018:

a. Issued common shares to Ms. Garriz in exchange for \(\$ 15,000\) cash

b. Paid \(\$ 850\) for first month's rent on office space

c. Purchased supplies of \(\$ 2,250\) on credit

d. Borrowed \(\$ 8,000\) from the bank

e. Paid \(\$ 1,080\) on account for supplies purchased earlier on credit

f. Paid secretary's salary for August of \(\$ 2,150\)
g. Performed accounting services for clients who paid cash upon completion of the service in the total amount of \(\$ 4,700\)

h. Used \(\$ 3,180\) of the supplies on hand i. Performed accounting services for clients on credit in the total amount of \(\$ 1,920\)
j. Purchased \(\$ 500\) in supplies for cash k. Collected \(\$ 1,290\) cash from clients for whom services were performed on credit 1. Declared and paid \(\$ 1,000\) dividend to shareholders \section*{Required:}
1. Record the effects of the transactions listed above on the basic accounting equation. Use the format given in the problem, starting with the totals at July 31, 2018.
2. Prepare the trial balance at August 31, 2018 .

Transcribed Image Text:

Assets Liabilities + Shareholders' Equity Accounts Accounts Notes Common Retained Cash Receivable Supplies Payable Payable Shares Earnings 8,000 + 15,900 + + + 4,100 2,500 4,000 12,000 9,500