(L. OBJ. 7, 8, 9, 10) Using the accounting equation for transaction analysis, preparing...

(L. OBJ. 7, 8, 9, 10) Using the accounting equation for transaction analysis, preparing financial statements, and evaluating business performance [60—75 min]

Manan Crone owns and operates a public relations firm called Dance Fever. The following amounts summarize her business on August 31, 2011:

During September 2011, the business completed the following transactions:

a. Owner invested cash of $15,000.

b. Performed service for a client and received cash of $1,200.

c. Paid off the beginning balance of accounts payable.

d. Purchased supplies from OfficeMax on account, $500.

e. Collected cash from a customer on account, $600.

f. Received cash of $2,000 from owner.

g. Consulted for a new hand and billed the client for services rendered, $5,300.

h. Recorded the following business expenses for the month:

1. Paid office rent, $1,100.

2. Paid advertising, $500.

i. Returned supplies to OfficeMax for $90 cash, which was the cost of the supplies.

j. Owner withdrew $2,000.

Requirements

1. Analyze the effects of the preceding transactions on the accounting equation of Dance Fever. Adapt the format to that of Exhibit 1-8.

2. Prepare the income statement of Dance Fever for the month ended September 30, 2011.

3. Prepare the entity’s statement of owner’s equity for the month ended September 30, 2011.

4. Prepare the balance sheet at September 30, 2011.