Horngren's Financial & Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780133866292
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 1, Problem 1.46AP
Using the
Angela Petrillo recently opened her own law office, which she operates as a corporation. The name of the new entity is Angela Petrillo, Attorney. Petrillo experienced the following events during the organizing phase of the new business and its first month of operation, March 2016. Some of the events were person al and did not affect the law practice. Others were business transactions and should be accounted for by the business.
Mar. 1 | Sold persona l investment in Amazon stock, which she had owned for several years, receiving $31,000 cash. |
2 | Deposited the $31,000 cash from the sale of the Amazon stock in her personal bank account. |
3 | Deposited $72,000 cash in a new business bank account titled Angela Petrillo, Attorney. The business issued common stock to Petrillo. |
5 | Paid $350 cash for ink cartridges for the printer. |
7 | Purchased computer for the law office, agreeing to pay the account, $5,500, within three months. |
9 | Received $2,500 cash from customers for services rendered. |
15 | Received bill from The Lawyer for magazine subscription, $340. (Use Miscellaneous Expense account.) |
23 | Finished court hearings on behalf of a client and submitted a bill for legal services, $18,000, on account. |
28 | Paid bill from The Lawyer. |
30 | Paid utilities, $1,300. |
31 | Received $1,800 cash from clients billed on Mar. 23. |
31 | Cash dividends of $2,000 were paid to stockholders. |
Requirements
- 1. Analyze the effects of the preceding events on the accounting equation of Angela Petrillo, Attorney. Use a format similar to Exhibit 1-6.
- 2. Prepare the following financial statements:
- a. Income statement.
- b. Statement of
retained earnings . - c.
Balance sheet .
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Although Deborah Adefowope has run a small business for many years, she has never kept adequate accounting records. However, a need to obtain a bank loan for the expansion of the business has necessitated the preparation of ‘final’ accounts for the year ended 31 August 2009. As a result, the following information has been obtained after much careful research:1. Deborah Adefowope’s business assets and liabilities are as follows:As at 1/09/08 31/08/09Stock in trade GHS8,600 GHS16,800Debtors for sales 3,900 4,300Creditors for purchases 7,400 8,900Rent prepaid 300 420Electricity accrued due 210 160Balance at bank 2,300 1,650Cash in hand 360 3302. All takings have been banked after deducting the following payments:Cash drawings – Deborah Adefowope has not kept a record of cash drawings, but suggests these will be in the region of GHS8,000Casual labour 1,200Purchase of goods for resale 1,800Note: takings have been the source of all amounts banked.3. Bank payments during the year ended 31…
Chapter 1 Solutions
Horngren's Financial & Managerial Accounting (5th Edition)
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