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 offce 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.
(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.