Refer to exercise 2-36B.

In exercise 2-36B.

Set up the following T-accounts: Cash, Accounts Receivable, Office Supplies, Office Furniture, Accounts Payable, Common Stock, Dividends, Service Revenue, Salary Expense, and Rent Expense. Record the following transactions directly in the T-accounts without using a journal. Use the letters to identify the transactions.

a. Eric Newton opened a law firm by investing $23,000 cash and office furniture with a fair value of $9,400. Organized as a professional corporation, the business issued common stock to Newton.

b. Paid monthly rent of $1,000.

Requirements

1. After recording the transactions in Exercise E2-36B, and assuming they all occurred in the month of December 2016, prepare the trial balance of Eric Newton, Attorney, at December 31, 2016. Use the T-accounts that have been prepared for the business.

2. How well did the business perform during its first month? Compute net income (or net loss) for the month.