Problem 3-2A a-b (Part Level Submission) On July 31, 2018, the general ledger of Pharoah Inc. showed these balances: Cash $3,990; Accounts Receivable $1,500; Supplies $530; Equipment $4,980; Accounts Payable $4,100; Common Shares $3,500; and Ret Earnings $3,400. During August, the following transactions occurred: Aug. 2 Collected $1,190 of accounts receivable due from customers. 3 Received $1,330 for issuing common shares to new investors. 6 Paid $2,670 on accounts payable owing. 7 Earned fees of $6,500, of which $2,970 was collected in cash and the remainder was due on account. 13 Purchased additional equipment for $1,190, paying $360 in cash and the balance on account. 17 Paid salaries, $3,530, rent, $900, and advertising expenses, $275, for the month of August. 17 Collected the balance of the fees earned on August 7. 20 Declared and paid $500 of dividends to shareholders. 22 Billed 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. (b) Prepare an income statement as at August 31. PHAROAH INC. Income Statement 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).) PHAROAH INC. Statement of Changes in Equity Common Shares Retained Earnings Total Equity PHAROAH INC. Statement of Financial Position Assets Liabilities and Shareholders' Equity LILID MILICO DuunITUTUCILyuicy Retained Earnings Cash Accounts Receivable + + Opening Retained Earnings Supplies + Bank Loan Payable Equipment = Accounts Payable + Common Shares + + + Revenues - Expenses Dividends Declared - 31 Bal $1 3,990 1,500 530 4,980 4,100 3,500 3,400 1 1,190 (1,190) T 1,330 1,330 (2,670) (2,670) 2,970 3530 6,500 (360) 1,190 830 4705) (3,530) (900) (275) 3530 (3530) (500) 500 1,000 1,000 2,000 2,000 275 (275) (500) (500) etbal 6275 1510 580 5170 - 2000 2535 4839 3400 2 7500 T (5480) (500) 3-2A a-b (Part Level Submission) 1, 2018, the general ledger of Pharoah Inc. showed these balances: Cash $3,990; Accounts Receivable $1,500; Supplies $530; Equipment $4,980; Accounts Payable $4,100; Common Shares $3,500; and Retained $$3,400. During August, the following transactions occurred: Collected $1,190 of accounts receivable due from customers. Received $1,330 for issuing common shares to new investors. Paid $2,670 on accounts payable owing. Earned fees of $6,500, of which $2,970 was collected in cash and the remainder was due on account. Purchased additional equipment for $1,190, paying $360 in cash and the balance on account. Paid salaries, $3,530, rent, $900, and advertising expenses, $275, for the month of August. Collected the balance of the fees earned on August 7. Declared and paid $500 of dividends to shareholders. Billed a client $1,000 for legal services provided. Received $2,000 from Laurentian Bank; the money was borrowed on a bank loan payable that is due in six months. Signed an engagement letter to provide legal services to a client in September for $4,520. Received the utility bill for the month of August in the amount of $275; it is due September 15. Paid income tax for the month, $500. answer is correct. 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 holders' 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.) Assets Liabilities + Shareholders' Equity Retained Earnings Cash Accounts Receivable + Opening Retained Earnings + Supplies + Bank Loan Payable Equipment = Accounts Payable + Common Shares + + + Dividends Declared Revenues - Expenses - 3,990 1,500 530 4,980 4,100 3,500 3,400 1,190 (1,190) 1,330 1,330
