Question

View Policies Current Attempt in Progress Nancy Jackson opened a law office on July 1, 2020. On July 31, the balance sheet showed Cash $5,200, Accounts Receivable $1,900, Supplies $500, Equipment $6,300, Accounts Payable $4,300, and Owner's Capital $9,600. During August, the following transactions occurred. 1. Collected $1,600 of accounts receivable. 2. Paid $2,800 cash on accounts payable. 3. Recognized revenue of $8,500, of which $3,200 is collected in cash and the balance is due in September. Purchased additional equipment for $1,600, paying $400 in cash and the balance on account 5. Paid salaries $1,800, rent for August $1,100, and advertising expenses $350. 6. Withdrew $800 in cash for personal use. Received $1,900 from Standard Federal Bank-money borrowed on a note payable. 8. Incurred utility expenses for month on account $290. 4 7.

Answer 1

Tabular analysis:

	Assets							=	Liabilities			+	Equity
	Cash	+	Accounts receivable	+	Supplies	+	Equipment		Accounts payable	+	Notes payable		Owner's Capital
Bal.	$5,200		$1,900		$500		$6,300		$4,300				$9,600
1	$1,600		($1,600)
2	($2,800)								($2,800)
3	$3,200		$5,300										$8,500
4	($400)						$1,600		$1,200
5	($3,250)												($3,250)
6	($800)												($800)
7	$1,900										$1,900
8									$290				($290)
Total	$4,650		$5,600		$500		$7,900		$2,990		$1,900		$13,760

Income Statement:

NANCY JACKSON, ATTORNEY LAW
Income Statement
For the month ended August 31,2020
Revenues:
Service revenue		$8,500
Expenses:
Salaries expense	$1,800
Rent expense	$1,100
Advertising expense	$350
Utilities expense	$290
Total expenses		$3,540
Net income		$4,960

Owner's Equity Statement:

NANCY JACKSON, ATTORNEY LAW
Owner's Equity Statement
For the month ended August 31,2020
Owner's capital, July 31	$9,600
Add: Net income	$4,960
	$14,560
(Less): Drawings	($800)
Owner's capital, Aug 31	$13,760

Balance Sheet:

NANCY JACKSON, ATTORNEY LAW
Balance Sheet
At August 31,2020
Assets
Cash	$4,650
Accounts receivable	$5,600
Supplies	$500
Equipment	$7,900
Total assets	$18,650
Liabilities and Owner's Equity
Accounts payable	$2,990
Notes payable	$1,900
Total liabilities	$4,890
Owner's Equity:
Owner's Capital	$13,760
Total liabilities and Owner's Equity	$18,650