Hillary Brennan Corporation was formed on July 1, 1996. On July 31, the balance sheet showed Cash \(\$ 4,000\), Accounts Receivable \(\$ 1,500\), Supplies \(\$ 500\), Office Equipment \(\$ 5,000\), Accounts Payable \(\$ 4,200\), Common Stock \(\$ 6,500\), and Retained Earnings \(\$ 300\). During August the following transactions occurred:

1. Collected \(\$ 1,400\) of accounts receivable. \(1 \pm 4\)

2. Paid \(\$ 2,700\) cash on accounts payable.

3. Earned fees of \(\$ 6,400\), of which \(\$ 3,000\) is collected in cash and the balance is due in September.

4. Purchased additional office equipment for \(\$ 1,000\), paying \(\$ 400\) in cash and the balance on account.

5. Paid salaries \(\$ 1,500\), rent for August \(\$ 900\), and advertising expenses \(\$ 350\).

6. Dividends of \(\$ 550\) were paid.

7. Received \(\$ 1,000\) from Standard Federal Bank-money borrowed on a note payable.

8. Incurred utility expenses for month on account, \(\$ 250\).

\section*{Instructions}

(a) Prepare a tabular analysis of the August transactions beginning with July 31 balances. The column heading should be as follows: Cash + Accounts Receivable + Supplies + Office Equipment \(=\) Notes Payable + Accounts Payable + Common Analyze transactions and prepare income statement and retained earnings statement.

(SO 6, 7, 8)


Analyze transactions and compute net income.

(50 6. 7)


Stock + Retained Earnings.

(b) Prepare an income statement for August, a retained earnings statement for August, and a balance sheet at August 31.