P1.8B

(LO4,5,6) APFraser Baker opened Baker's Accounting Service in Winnipeg on September 1, 2021. On September 30, the balance sheet showed Cash $5,700; Accounts Receivable $2,100; Supplies $350; Equipment $7,600; Accounts Payable $4,300; and F. Baker, Capital $11,450. During October, the following transactions occurred:

Oct. 1

Paid $3,800 of the accounts payable.

1

Paid $900 rent for October.

4

Collected $1,550 of the accounts receivable.

5

Hired a part-time office assistant at $80 per day to start work the following week.

8

Purchased additional equipment for $4,000, paying $500 cash and signing a note payable for the balance.

14

Performed $900 of accounting services on account.

15

Paid $300 for advertising.

18

Collected $400 from customers who received services on October 14.

20

Paid $500 for family dinner celebrating Fraser's son's university graduation.

25

Borrowed $8,000 from the Manitoba Bank on a note payable.

26

Sent a statement reminding a customer that he still owed the company money from September.

28

Earned revenue of $5,400, of which $3,100 was paid in cash and the balance was due in November.

29

Paid the part-time office assistant $720 for working nine days in October.

29

Received $2,800 cash for accounting services to be performed in November.

30

Received the telephone bill for the month, $205.

30

Withdrew $1,200 cash for personal expenses.

Instructions

a.Beginning with the September 30 balances, tabular analysis of the effects of the October transactions on the accounting equation.

b.An income statement and statement of owner's equity for October, and a balance sheet at October 31.