Makings w Mo Sp San DEMONSTRATION PROBLEM After several months of planning, Joanne Cardinalstarted a harcutting business called The Cutlery. The following business activitesocomed during first month August 2017 On August 1, Cardinal put $36,000 cash into a cherging account in the name of The Cutlery She b. On August 2, she paid $2,000 cash for future for the shop On August 3, she paid $3,200 cash to rent space in a strip mall for August On August 4, she equipped the shop by installing the old equipment and some new equipment the end of August, September, and October amount is to be repaid in three equal payments e. On Augnt, The Cutlery opened for business. Receipts from services provided for cash in the firsts tweek. On August 15, Cardinal provided haircutting services on account for $750 On August 17, Cardinal received a cheque in the mal for services previously rendered on account h. On August 17, Cardinal pad wages of $250 to an ant for working during the grand opening On August 18, Cardinal interviewed job applicant. The applicant was successful in getting the Cash receipts from services provided during the second half of August was $1,500 On August 13, Cardinal pad an instalment on the account payable created in (d) 1 On August 31, the August hydrobd for $450 was received. It will be paid on September 14 On August 31, Cardinal withdrew $500 cash for her personale e W 27 16 DELL F7 19C Ma FB F10 DCP SLICE Sya F11 Pink Sam & Required 1. Arrange the following asset, liability, and equity titles in a table similar to the one in Exhibit 1.15: Cash; Accounts Receivable; Furniture; Store Equipment; Accounts Payable; and Joanne Cardinal, Capital. Show the effects of each transaction on the equation. Explain each of the changes in equity. 2. Prepare an income statement for August. 3. Prepare a statement of changes in equity for August. 4. Prepare a balance sheet as of August 31. Analysis Component: a. Identify how much of the assets held by The Cutlery are owned by the owner, Joanne Cardinal. b. How much of the total assets are financed by equity? By debt? Explain what it means to "finance assets by equity: and to "finance assets by debt." Planning the Solution . . Set up a table with the appropriate columns, including a final column for describing the transactions that affect equity. Identify and analyze each transaction and show its effects as increases or decreases in the appropriate columns. Be sure that the accounting equation remains in balance after each transaction. To prepare the income statement, find the revenues and expenses in the Explanation of Equity Transaction column. List those items on the statement, calculate the difference, and label the result as profit or loss. Use the information in the Explanation of Equity Transaction column to prepare the statement of changes in equity. Use the information in the last row of the table to prepare the balance sheet. Prepare an answer to each part of the analysis component question. Requirement 1 ASSETS = LIABILITIES + EQUITY Accounts Furniture Receivable Store Accounts Joanne Equipment Payable Cardinal Explanation Capital a. 16,000 Cash ++ Atos A A Ab AaBbc Aalbe AaB Te Requirment 2, 3 and 4 Name of Company Income Statement c Date Name of Company Statement of Changes in Equity Date Name of Company Balance Sheet FO DELL 9 F3 14 16 F7 F9 F10 DCP $ % & 3 5 6 7 7 9 8 9 AuCD Auto AaBbc AaBbCc AaB Name of Company Statement of Changes in Equity Date fi A Name of Company Balance Sheet Date E DELL FF4 F5 F6 FB F9 F10 DCP