Linda Carter is an architect who operates her own business. The accounts and transactions...

Linda Carter is an architect who operates her own business. The accounts and transactions for the business follow.

INSTRUCTIONS

(1) Analyze the transactions for January 2013. Record each in the appropriate T accounts. Use plus and minus signs in front of the amounts to show the increases and decreases. Identify each entry in the T account by writing the letter of the transaction next to the entry.

(2) Determine the account balances. Prepare a trial balance, an income statement, a statement of owner’s equity, and a balance sheet.

ASSETS

Cash

Accounts Receivable

Office Furniture

Office Equipment

LIABILITIES

Accounts Payable

OWNER’S EQUITY

Linda Carter, Capital

Linda Carter, Drawing

REVENUE

Fees Income

EXPENSES

Advertising Expense

Utilities Expense

Salaries Expense

Telephone Expense

Miscellaneous Expense

TRANSACTIONS

a. Linda Carter invested $20,000 in cash to start the business.

b. Paid $2,000 for advertisements in a design magazine.

c. Purchased office furniture for $3,600 in cash.

d. Performed services for $4,050 in cash.

e. Paid $210 for the monthly telephone bill.

f. Performed services for $1,560 on credit.

g. Purchased a fax machine for $475; paid $150 in cash with the balance due in 30 days.

h. Paid a bill for $550 from the office cleaning service.

i. Received $2,160 from clients on account.

j. Purchased additional office chairs for $590; received credit terms of 30 days.

k. Paid $4,000 for salaries.

l. Issued a check for $540 in partial payment of the amount owed for office chairs.

m. Received $2,800 in cash for services performed.

n. Issued a check for $460 for utilities expense.

o. Performed services for $3,200 on credit.

p. Collected $1,200 from clients on account.

q. Linda Carter withdrew $2,500 in cash for personal expenses.

r. Paid $600 to Quick Copy Service for photocopy work performed during the month.

Analyze: Using the basic accounting equation, what is the financial condition of Linda Carter’s business at month-end?