Question
P3-3A Cindy Braun created a corporation providing legal services, Cindy Braun Inc., on July 1, 2014. On July 31 the balance sheet showed Cash $4,000;
P3-3A Cindy Braun created a corporation providing legal services, Cindy Braun Inc., on
July 1, 2014. On July 31 the balance sheet showed Cash $4,000; Accounts Receivable $2,500;
Supplies $500; Equipment $5,000; Accounts Payable $4,200; Common Stock $6,200; and
Retained Earnings $1,600. During August, the following transactions occurred.
Aug. 1 Collected $1,100 of accounts receivable due from customers.
4 Paid $2,700 cash for accounts payable due.
9 Performed services worth $5,400, of which $3,600 is collected in cash and
the balance is due in September.
15 Purchased additional office equipment for $4,000, paying $700 in cash and
the balance on account.
19 Paid salaries $1,400, rent for August $700, and advertising expenses $350.
23 Paid a cash dividend of $700.
26 Borrowed $5,000 from Standard Federal Bank; the money was borrowed on
a 4-month note payable.
31 Incurred utility expenses for the month on account $380.
Instructions
(a) Prepare a tabular analysis of the August transactions beginning with July 31 balances.
The column heading should be Cash + Accounts Receivable +Supplies + Equipment
= Notes Payable + Accounts Payable + Common Stock + Retained Earnings +
Revenues - Expenses - Dividends. Include margin explanations for any changes in
Retained Earnings.
(b) Prepare an income statement for August, a retained earnings statement for August,
and a classified balance sheet at August 31.
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