On July 31, 2018, the general ledger of Blossom Inc. showed these balances: Cash $3,990; Accounts Receivable $1,500; Supplies $460; Equipment $5,040; Accounts Payable $4,090; Common Shares $3,500; and Retained Earnings $3,400. During August, the following transactions occurred:

Aug.2

Collected $1,200 of accounts receivable due from customers.

3

Received $1,320 for issuing common shares to new investors.

6

Paid $2,670 on accounts payable owing.

7

Earned fees of $6,500, of which $2,980 was collected in cash and the remainder was due on account.

13Purchased additional equipment for $1,210, paying $390 in cash and the balance on account.

17Paid salaries, $3,520, rent, $900, and advertising expenses, $275, for the month of August.

17Collected the balance of the fees earned on August 7.

20

Declared and paid $500 of dividends to shareholders.22Billed a client $1,000 for legal services provided.

24

Received $2,000 from Laurentian Bank; the money was borrowed on a bank loan payable that is due in six months.

27

Signed an engagement letter to provide legal services to a client in September for $4,520.

28

Received the utility bill for the month of August in the amount of $275; it is due September 15.

31

Paid income tax for the month, $500.

Question 1

Beginning with the July 31 balances, prepare an equation analysis of the effects of the opening balances and above transactions on the expanded accounting equation.(If a transaction causes a decrease in Assets, Liabilities or Shareholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced. See Illustration 3-2 for example.)

Question 2

Prepare an income statement as at August 31.

Question 3

Prepare a statement of changes in equity as at August 31.(If an amount reduces the account balance then enter with negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Question 4

Prepare a statement of financial position as at August 31.(List Current Assets in order of liquidity.)