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 Services. The following captions and amounts summarize Madero’s balance sheet at July 31, 2009.

Assets 5 Liabilities 1 Equity Cash þ

Accounts Receivable þ Supplies ¼

Accounts Payable þ

Notes Payable þ

Capital Stock þ

Retained Earnings 8,000 15,900 4,100 2,500 4,000 12,000 9,500 The following events occurred during August 2009.

a. Sold common stock to Ms. Garriz in exchange for $20,000 cash

b. Paid $700 for first month’s rent on office space

c. Purchased supplies of $2,100 on credit

d. Borrowed $5,000 from the bank

e. Paid $1,200 on account for supplies purchased earlier on credit

f. Paid secretary’s salary for August of $1,850 g. Performed accounting services for clients who paid cash upon completion of the service in the total amount of $2,700 h. Performed accounting services for clients on credit in the total amount of $1,500 i. Purchased and used $500 in supplies j. Collected $690 cash from clients for whom services were performed on credit k. Paid $300 dividend to stockholders Required:

. Record the effects of the transactions listed above on the accounting equation. Use format given in the problem, starting with the totals at July 31, 2009.

. Prepare the trial balance at August 31, 2009.