Question
A law firm has 2 accounts - a trust account and an operating account. May 15 - The Firm received its first client, Richard Parker.
A law firm has 2 accounts - a trust account and an operating account.
May 15 - The Firm received its first client, Richard Parker. The client paid a retainer in the amount of $500,000 by cheque.
May 20 - A Partner took control of the Richard Parker matter, incurring administrative expenses in the amount of $100,000. This was paid by cheque drawn on the trust account
May 25 - The Richard Parker matter closed on May 24. The partner then prepared a statement of account for the client, as shown below. Attorneys fees $550,000 Administrative expenses $ 100,000 Total cost to the client $650,000 Less retainer advance $500,000 Due from client $150,000
May 26 - The client received the statement and paid the statement balance in the amount of $150,000. Payment was made by cheque.
May 31 - At the partners' meeting held on May 31, it was agreed that the legal fees charged on the Richard Parker matter were now earned and are to be transferred to the Firms operating bank account.
Required: (i) Prepare the ledger accounts to reflect the accounting transactions for the month of May
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