Ai Fang Co. opened on July 1, 2020. On July 31, the statement of fi nancial position showed Cash ¥5,000, Accounts Receivable ¥1,500, Supplies ¥500, Equipment ¥6,000, Accounts Payable ¥4,200, Share Capital—Ordinary ¥4,000, and Retained Earning of ¥4,800 (amounts in thousands). During August, the following transactions occurred.
- Collected ¥1,200 of accounts receivable.
- Paid ¥2,800 cash on accounts payable.
- Recognized revenue of ¥7,500 of which ¥4,000 is collected in cash and the balance is due in September.
- Purchased additional equipment for ¥2,000, paying ¥400 in cash and the balance on account.
- Paid salaries ¥2,800, rent for August ¥900, and advertising expenses ¥400.
- Declared and paid ¥700 dividend.
- Received ¥2,000 from Standard Bank—money borrowed on a note payable.
- Incurred utility expenses for month on account ¥270.Instructions
b. Prepare an income statement for August, a retained earnings statement for August, and a statement of fi nancial position at August 31.