Chapter 2, Problem 56APSA

Problem 2-56A Analyzing Transactions

Luis Madero, after working for several years with a large public accounting firm decided to open his own accounting service. The business is operated as a corporation under the name Madero Accounting Services. The following captions and amounts summarize Madero’s balance sheet at July 31, 2019.

The following events occurred during August 2019.

1. Issued common stock to Ms. Garriz in exchange for $15,000 cash.
2. Paid $850 for first month’s rent on office space.
3. Purchased supplies of $2,250 on credit.
4. Borrowed $8,000 from the bank.
5. Paid $1,080 on account for supplies purchased earlier on credit.
6. Paid secretary’s salary for August of $2,150.
7. Performed amounting services for clients who paid cash upon completion of the service in the total amount of $4,700.
8. Used $3,180 of the supplies on hand.
9. Perfumed accounting services for clients on credit in the total amount of $1,920.
10. Purchased $500 in supplies for cash.
11. Collected $1,290 cash from clients for whom services were performed on credit.
12. Paid $1,000 dividend to stockholders.

Required:

1. Record the effects of the transactions listed above on the accounting equation. Use the format given in the problem, starting with the totals at July 31, 20l9.
2. Prepare the trial balance at August 31, 2019.