Chapter 1, Problem 1.53BP

Using the accounting equation for transaction analysis and preparing financial statements

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:

1. a. Income statement.
2. b. Statement of retained earnings.
3. c. Balance sheet.