Question
Analyze the events chronologically, one transaction at a time. Beginning with the transaction on the 2nd, calculate the balance in each account after analyzing the
Analyze the events chronologically, one transaction at a time. Beginning with the transaction on the 2nd, calculate the balance in each account after analyzing the effect of the transaction on the accounting equation. After calculating the ending balance of each account on the3131st, calculate total assets and total liabilities and equity. (Complete only the necessary answer boxes for your transaction lines. If a box is not used in the table leave the box empty; do not enter a zero for the transaction lines.] If a transaction is personal and does not affect the business, leave the transaction line blank. Carry down all balances to the "Bal." line, including zero balance accounts, entering a "0" for any zero balances. Enter a decrease in an account with a minus sign or parentheses. Abbreviations used: A/P = Accounts Payable; A/R = Accounts Receivable; Com. = Common; Contr. Cap. = Contributed Capital; Div. = Dividends; Comp. = Computer; Exp. = Expense; Liab. = Liabilities; Misc. = Miscellaneous; Rev. = Revenue; Sup. = Supplies; Util. = Utilities.)
PivonePivone
recently opened her own law office, which she operates as a corporation. The name of the new entity is
AlexaAlexa
PivonePivone,
Attorney.
PivonePivone
experienced the following events during the organizing phase of the new business and its first month of operation,
MarchMarch
20162016.
Some of the events were personal and did not affect the law practice. Others were business transactions and should be accounted for by the business.
| 1 | Sold personal investment in Amazon stock, which she had owned for several years, receiving $ 25 comma 000$25,000 cash. | |
| 2 | Deposited the $ 25 comma 000$25,000 cash from the sale of the Amazon stock in her personal bank account. | |
| 3 | Deposited $ 70 comma 000$70,000 cash in a new business bank account titledAlexaAlexa PivonePivone, Attorney. The business issued common stock toPivonePivone. | |
| 5 | Paid $ 350$350 cash for ink cartridges for the printer. | |
| 7 | Purchased computer for the law office, agreeing to pay the account, $ 6 comma 500$6,500, within three months. | |
| 9 | Received $ 3 comma 100$3,100 cash from customers for services rendered. | |
| 15 | Received bill from The Lawyer for magazine subscription, $ 100$100. (Use Miscellaneous Expense account.) | |
| 23 | Finished court hearings on behalf of a client and submitted a bill for legal services, $ 8 comma 000$8,000, on account. | |
| 28 | Paid bill from The Lawyer. | |
| 30 | Paid utilities, $ 1 comma 400$1,400. | |
| 3131 | Received $ 1 comma 000$1,000 cash from clients billed onMar.Mar. 23. | |
| 3131 | Cash dividends of $ 3 comma 000$3,000 were paid to stockholders. |
| ASSETS | = | LIAB. | + | EQUITY | |||||||||||||||
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| Contr. |
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| Cap. | + | Retained Earnings | ||||||||||||
| Cash | + | A/R | + | Office | + | Comp. | = | A/P | + | Com. | - | Div. | + | Service | - | Util. | - | Misc. | |
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| Sup. |
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| Stock |
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| Rev. |
| Exp. |
| Exp. | |
| 3/1 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/2 |
| + |
| + |
| + |
| = |
| + | - |
| + |
| - |
| - |
| |
| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/3 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/5 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/7 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/9 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/15 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/23 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/28 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/30 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/31 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| 3/31 |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Bal. |
| + |
| + |
| + |
| = |
| + |
| - |
| + |
| - |
| - |
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| Tot. |
| = |
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Requirement 2. Prepare the financial statements.
a. Income statement. (If a box is not used in the table leave the box empty; do not select a label or enter a zero.)
Review the ending balances of the accounts from Requirement 1.
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| Net Income |
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b. Statement of retained earnings.
Enter any increases in retained earnings prior to the subtotal and any decreases to retained earnings below the subtotal. (Enter a "0" for any zero balances. Use a minus sign or parentheses to show a decrease in retained earnings.)
Review the ending balances of the accounts from Requirement 1.
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| Retained Earnings, March 1, 2016 |
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| Retained Earnings, March 31, 2016 |
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c. Balance sheet. (If a box is not used in the table leave the box empty; do not select a label or enter a zero.)
Review the ending balances of the accounts from Requirement 1.
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Auditor Essentials 100 Concepts Tips Tools And Techniques For Success
Authors: Hernan Murdock
1st Edition
1138036919, 978-1138036918
