Using the
Ariana Peterson recently opened her own law office, which she operates as a corporation. The name of the new entity is Ariana Peterson, Attorney Peterson experienced the following events during the organizing phase of the new business and its first month of operation, December 2 016. 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.
Dec. 1 | Sold personal investment in Nike stock, which she had owned for several years, receiving $25,000 cash. |
2 | Deposited the $25,000 cash from the sale of the Nike stock in her personal bank account. |
3 | Deposited $65,000 cash in a new business bank account titled Ariana Peterson, Attorney. The business issued common stock to Peterson. |
5 | Paid $400 cash for ink cartridges for the printer. |
7 | Purchased computer for the law office, agreeing to pay the account, $6,800, within three months. |
9 | Received $2,900 cash from customers for services rendered. |
15 | Received bill from The Lawyer for magazine subscription, $300. (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, $840. |
31 | Received $2,800 cash from clients billed on Dec. 23. |
31 | Cash dividends of $2,500 were paid to stockholders. |
Requirements
1. Analyze the effects of the preceding events on the accounting equation of Ariana Peterson, Attorney. Use a format similar to Exhibit 1-6.
2. Pre pare the following financial statements:
- a. Income statement.
- b. Statement of
retained earnings . - c.
Balance sheet .
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Horngren's Financial & Managerial Accounting, The Managerial Chapters, Student Value Edition (5th Edition)
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