This Demonstration Problem is based on the same facts as the Demonstration Problem at the end of Chapter 1 except for two additional Items: (b) August 1 and (k) August 18. The following activities occurred during the first month of Joane Cardinal's new haircut- ting business called The Cutlery: a. On August 1, Cardinal put $16,000 cash into a chequing account in the name of The Cutlery. She also invested $10,000 of equipment that she already owned. b. On August 1. Cardinal paid $2,400 for six months of insurance effective immediately c. On August 2, she paid $2,000 cash for furniture for the shop. d. On August 3, she paid $3,200 cash to rent space in a strip mall for August, e. On August 4, she furnished the shop by installing the old equipment and some new equipment that she bought on credit for $21,000. This amount is to be re- paid in three equal payments at the end of August, September, and October f. On August 5, The Cutlery opened for business. Cash receipts from haircutting services provided in the first week and a half of business (ended August 15) were $1,100 8 On August 15, Cardinal provided haircutting services on account for $750. h. On August 17, Cardinal received a $750 cheque in the mall for services previ ously rendered on account. i. On August 17, Cardinal paid $250 to an assistant for working during the gran opening CHAPTER 2 Analyzing and Recording Transactions n. 1. On August 18, Cardinal interviewed a job applicant. The applicant was sucOS- ful in getting the position and will receive $750 per week for part-time work starting in September. k. On August 18, a regular customer paid $500 for services to be provided over the next three months 1. Cash receipts from haltcutting services provided during the second half of August were $1.950. m. On August 31, Cardinal paid an Installment on the account payable created in (e) above. On August 31, the August hydro bill for 5450 was received. It will be paid on September 14. o. On August 31, she withdrew 5500 cash for her personal use. Required 1. Prepare General Journal entries for the preceding transactions. 2. Open the following accounts: Cash, 101; Accounts Receivable, 106; Prepaid in surance, 128; Furniture, 161; Store Equipment, 165; Accounts Payable, 201; Un. earned Haircutting Services Revenue, 236; Joane Cardinal, Capital, 301; Joane Cardinal, Withdrawals, 302; Halrcutting Services Revenue, 403, Wages Expense, 623; Rent Expense, 640; and Hydro Expense, 690. 3. Post the journal entries to the ledger accounts. 4. Prepare a trial balance as of August 31, 2014. 5. Prepare an income statement and a statement of changes in equity for the month ended August 31, 2014, and a balance sheet at August 31, 2014. Analysis Component Refer to The Cutlery's August 31, 2014, financial statements. What do each of equity and liabilities represent? Planning the Solution Analyze each activity to determine if It is a transaction. For each transaction, identify the accounts affected and the amount of each effect. Use the debit and credit rules to prepare a journal entry for each transaction Post each debit and each credit in the fournal entries to the appropriate ledger accounts and cross-reference each amount in the Posting Reference columns in the journal and account. Calculate each account balance and list the accounts with their balances on a trial balance. Verify that the total debits in the trial balance equal total credits. Prepare an income statement, statement of changes in equity, and balance sheet using the information in the trial balance. Prepare an answer to each part of the analysis component