George Forbes operates a law office under the name George Forbes, Law Offices. On June 30, 2002, the balance sheet showed Cash $3,000, Accounts Receivable $1,200, Supplies $600, Office Equipment $5,900, Accounts Payable $3,400, and George Forbes, Capital, $7,300. During July the following transactions occurred: 1. Collected $1,000 of account receivable. 2. Paid $2,800 cash on accounts payable. 3. Earned fees of $7,500, of which $3,500 is collected in cash and the balance is due in August. 4. Purchased additional office equipment for $1,500, paying $500 in cash and the balance on account. 5. Paid salaries $1,600, rent for July $800, and advertising expenses, $250. 6. Withdrew $750 in cash for personal use. 7. Received $3,000 from the Bank of Montreal money borrowed on a note payable. 8. Incurred utility expenses for month on account, $275. Instructions: a) Beginning with June 30 balances, prepare a tabular analysis of the July transactions. The column headings should be as follows: Cash + Accounts Receivable + Supplies + Office Equipment = Accounts Payable + George Forbes, Capital. (b) Prepare an income statement for July, a statement of owner\'s equity for July and a balance sheet at July 31 Solution Tabular analysis of the July transactions S.No. Cash + Accounts Receivable + Supplies + Office Equipment = Accounts Payable + George Forbes, Capital Balance $ 3,000 + $ 1,200 + $ 600 + $ 5,900 = $ 3,400 + $ 7,300 1 $ 1,000 + $ (1,000) + + = + 2 $ (2,800) + + + = $ (2,800) + 3 $ 3,500 + $ 4,000 + + = + $ 7,500 4 $ (500) + + + $ 1,500 = $ 1,000 + 5 $ (2,650) + + + = + $ (2,650) 6 $ (750) + + + = + $ (750) 7 $ 3,000 + + + = $ 3,000 + 8 $ (275) $ (275) Ending Balance $ 3,525 + $ 4,200 + $ 600 + $ 7,400 = $ 4,600 + $ 11,125 Income Statement: Fees revenue $ 7,500 Less: Salaries Expenses $ (1,600) Less: Rent Expenses $ (800) Less: advertising expenses $ (250) Less: utility expenses $ (275) Net income $ 4,575 Statement of owner\'s equity Beginning balance $ 7,300 Net income $ 4,575 Less: Withdrawals $ (750) Ending balance $ 11,125 Balance sheet at July 31 Assets: Cash $ 3,525 Accounts Receivable $ 4,200 Supplies $ 600 Office Equipment $ 7,400 Total Assets $ 15,725 Liabilities Accounts Payable $ 4,600 Owner\'s equity $ 11,125 Total Liabilities and Equity $ 15,725 Tabular analysis of the July transactions S.No. Cash + Accounts Receivable + Supplies + Office Equipment = Accounts Payable + George Forbes, Capital Balance $ 3,000 + $ 1,200 + $ 600 + $ 5,900 = $ 3,400 + $ 7,300 1 $ 1,000 + $ (1,000) + + = + 2 $ (2,800) + + + = $ (2,800) + 3 $ 3,500 + $ 4,000 + + = + $ 7,500 4 $ (500) + + + $ 1,500 = $ 1,000 + 5 $ (2,650) + + + = + $ (2,650) 6 $ (750) + + + = + $ (750) 7 $ 3,000 + + + = $ 3,000 + 8 $ (275) $ (275) Ending Balance $ 3,525 + $ 4,200 + $ 600 + $ 7,400 = $ 4,600 + $ 11,125 Income Statement: Fees revenue $ 7,500 Less: Salaries Expenses $ (1,600) Less: Rent Expenses $ (800) Less: advertising expenses $ (250) Less: utility expenses $ (275) Net income $ .

1. George Forbes operates a law office under the name George Forbes, Law Offices. On June 30,
2002, the balance sheet showed Cash $3,000, Accounts Receivable $1,200, Supplies $600,
Office Equipment $5,900, Accounts Payable $3,400, and George Forbes, Capital, $7,300.
During July the following transactions occurred:
1. Collected $1,000 of account receivable.
2. Paid $2,800 cash on accounts payable.
3. Earned fees of $7,500, of which $3,500 is collected in cash and the balance is due in August.
4. Purchased additional office equipment for $1,500, paying $500 in cash and the balance on
account.
5. Paid salaries $1,600, rent for July $800, and advertising expenses, $250.
6. Withdrew $750 in cash for personal use.
7. Received $3,000 from the Bank of Montreal money borrowed on a note payable.
8. Incurred utility expenses for month on account, $275.
Instructions:
a) Beginning with June 30 balances, prepare a tabular analysis of the July transactions. The
column headings should be as follows: Cash + Accounts Receivable + Supplies + Office
Equipment = Accounts Payable + George Forbes, Capital.
(b) Prepare an income statement for July, a statement of owner's equity for July and a balance
sheet at July 31
Solution
Tabular analysis of the July transactions
S.No.
Cash
+
Accounts Receivable
+
Supplies
+
Office Equipment
=
Accounts Payable
+
George Forbes, Capital

2. Balance
$ 3,000
+
$ 1,200
+
$ 600
+
$ 5,900
=
$ 3,400
+
$ 7,300
1
$ 1,000
+
$ (1,000)
+
+
=
+
2
$ (2,800)
+
+
+
=
$ (2,800)
+
3
$ 3,500
+
$ 4,000
+
+
=
+

3. $ 7,500
4
$ (500)
+
+
+
$ 1,500
=
$ 1,000
+
5
$ (2,650)
+
+
+
=
+
$ (2,650)
6
$ (750)
+
+
+
=
+
$ (750)
7
$ 3,000
+
+
+
=
$ 3,000
+
8
$ (275)

4. $ (275)
Ending Balance
$ 3,525
+
$ 4,200
+
$ 600
+
$ 7,400
=
$ 4,600
+
$ 11,125
Income Statement:
Fees revenue
$ 7,500
Less: Salaries Expenses
$ (1,600)
Less: Rent Expenses
$ (800)
Less: advertising expenses
$ (250)
Less: utility expenses
$ (275)
Net income
$ 4,575
Statement of owner's equity
Beginning balance
$ 7,300
Net income
$ 4,575
Less: Withdrawals
$ (750)
Ending balance
$ 11,125
Balance sheet at July 31

5. Assets:
Cash
$ 3,525
Accounts Receivable
$ 4,200
Supplies
$ 600
Office Equipment
$ 7,400
Total Assets
$ 15,725
Liabilities
Accounts Payable
$ 4,600
Owner's equity
$ 11,125
Total Liabilities and Equity
$ 15,725
Tabular analysis of the July transactions
S.No.
Cash
+
Accounts Receivable
+
Supplies
+
Office Equipment
=
Accounts Payable
+
George Forbes, Capital
Balance
$ 3,000
+
$ 1,200
+

6. $ 600
+
$ 5,900
=
$ 3,400
+
$ 7,300
1
$ 1,000
+
$ (1,000)
+
+
=
+
2
$ (2,800)
+
+
+
=
$ (2,800)
+
3
$ 3,500
+
$ 4,000
+
+
=
+
$ 7,500
4
$ (500)
+
+

7. +
$ 1,500
=
$ 1,000
+
5
$ (2,650)
+
+
+
=
+
$ (2,650)
6
$ (750)
+
+
+
=
+
$ (750)
7
$ 3,000
+
+
+
=
$ 3,000
+
8
$ (275)
$ (275)
Ending Balance
$ 3,525
+
$ 4,200

8. +
$ 600
+
$ 7,400
=
$ 4,600
+
$ 11,125
Income Statement:
Fees revenue
$ 7,500
Less: Salaries Expenses
$ (1,600)
Less: Rent Expenses
$ (800)
Less: advertising expenses
$ (250)
Less: utility expenses
$ (275)
Net income
$ 4,575
Statement of owner's equity
Beginning balance
$ 7,300
Net income
$ 4,575
Less: Withdrawals
$ (750)
Ending balance
$ 11,125
Balance sheet at July 31
Assets:
Cash
$ 3,525
Accounts Receivable
$ 4,200

9. Supplies
$ 600
Office Equipment
$ 7,400
Total Assets
$ 15,725
Liabilities
Accounts Payable
$ 4,600
Owner's equity
$ 11,125
Total Liabilities and Equity
$ 15,725