Suraya opened a law office, Suraya, Attorney at Law, on April 1, 2007. On July 31, the balance sheet showed Cash RM 4,000; Account receivable RM 1,500; Supplies RM 500; Office Equipment RM 5,000; Account payable RM 4,200 and Suraya, capital RM 6,800. During August the following transactions occurred.
- Collected RM 1,400 of account receivable.
- Paid RM 2,700 cash on account payable.
- Earned revenue of RM 7,500 of which RM 3,000 is collected in cash and the balance is due in September.
- Purchased additional office equipment for RM 1,000, paying RM 400 in cash and the balance on account.
- Paid salaries RM 3,000, rent for August RM 900 and advertising expenses RM 350.
- Withdrew RM 550 in cash for personal use.
- Received RM 2,000 from Standard Federal Bank money borrowed on a note payable.
- Incurred utility expenses for month on account RM 250.
Instructions :
a) Prepare a tabular analysis of the August transactions beginning with July 31 balances. The column headings should be as follows: Cash + Account receivable + Supplies + Office Equipment = Account payable + Notes payable + Suraya, capital+ Retained earnings.
b) Prepare an income statement for August 31.