ANALYZE TRANSACTIONS AND PREPARE FINANCIAL STATEMENTS. Luis Madero, after working for several years with a large public accounting firm, decided to open his own accounting service business. The business is operated as a corporation under the name Madero Accounting Services. The following events occurred during August 19x9, the first month of operations:

a) Sold capital stock to Mr. Madero and several friends in exchange for $20,000 cash.

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

c) Purchased supplies for $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 ser- vice in the total amount of $2,700.
h) Performed accounting services for clients on credit in the total amount of $1,500.
i) Used $500 in supplies.
j) Collected $690 cash from clients for whom services were performed on credit.
k) Paid a $300 dividend to stockholders.
REQUIRED:
1. Record the effects of the transactions listed above on the accounting equation for the business. Use a format similar to the “Summary of Transaction Analysis” in Exhibit 1-3 in the chapter.
2. Prepare the balance sheet at August 31, 19x9, and the income statement, statement of changes in retained earnings, and statement of cash flows for the month of August 19x9.