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Hart, Attorney at Law, experienced the following transactions in Year 1, the first year of operations 1. Accepted $36,000 on April 1, Year 1, as

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Hart, Attorney at Law, experienced the following transactions in Year 1, the first year of operations 1. Accepted $36,000 on April 1, Year 1, as a retainer for services to be performed evenly over the next 12 months 2. Performed legal services for cash of $54,000. 3. Purchased $2,800 of office supplies on account 4. Paid $2,400 of the amount due on accounts payable. 5. Paid a cash dividend to the stockholders of $5,000. 6. Paid cash for operating expenses of $31,000 7. Determined that at the end of the accounting period $200 of office supplies remained on hand. 8. On December 31, Year 1, recognized the revenue that had been earned for services performed in accordance with Transaction 1 Required Show the effects of the events on the financial statements using the following horizontal statements model in the Cash Flows column, use OA to designate operating activity, FA for financing activity. IA for investing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. The first event has been recorded as an example. (Do not round intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.) Assets HART, ATTORNEY AT LAW Effect of Transactions on the Financial Statements for Year 1 Balance Sheet Income Statement Liabilities Stockholders Equity Accounts Uneamed Retained Revenue Payable Expense Revenue Earnings 36,000 54.000 54.000 2 800 - 12.400) Statement of Cash Flow Event No Cash Supplies Net Income 1. 2 3 36.000 54,000 38.000 54,000 54.000 OA 2.800 4 (2400) - (2.400) ERA Assets Statement of Cash Flow Event No Cash Supplies Net Income 1. + 36,000 - 54,000 2 HART, ATTORNEY AT LAW Effect of Transactions on the Financial Statements for Year 1 Balance Sheet Income Statement Liabilities Stockholders Equity Accounts Unearned Retained Payable Revenue Earnings Revenue Expense 36,000 54,000 54,000 2,800 (2400) (5,000) (31,000) 31,000 = (2,600) 2,600 (27,000) 27,000 27,000 400+ 9,000+ 42.400 81,000 33,600 36,000 54,000 54,000 2.800 . 3. 4. 5. (2.400) (5,000) (31,000) . (2.400) (5,000) FA (31.000) OA 6. (2.600) + 7 8. Totals (31.900) (2.600) 27.000 47.400 51,600 - 200 51,600

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