Ross Attorney at Law experienced the following transactions

Ross, Attorney at Law, experienced the following transactions in 2014, the first year of operations: 1. Purchased $1,500 of office supplies on account. 2. Accepted $36,000 on February 1, 2014, as a retainer for services to be performed evenly over the next 12 months. 3. Performed legal services for cash of $84,000. 4. Paid cash for salaries expense of $32,000 5. Paid a cash dividend to the stockholders of $8,000. 6. Paid $1,200 of the amount due on accounts payable. 7. Determined that at the end of the accounting period, $150 of office supplies remained on hand. 8. On December 31, 2014, recognized the revenue that had been earned for services performed in accordance with Transaction 2. Required Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and NA to indicate accounts not affected by the event. 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.) 0 ROSS, ATTORNEY AT LAW Effect of Transactions on the Financial Statements for 2014 Stockholders +Equity Assets Liabilities ncome Statement Statement of Cash Flow Transaction Accounts Cash + Supplies Payable Unearned Revenue Retained Revenue Earnings ExpenseNet Income 1.5001 = 1,500 NA Totals 1.500- 1,500+

Solution

Effect of the events on the financial statements is as prepared below:

Ross Attorney at law
Effect of transactions on the financial statements for 2014
	Assets	=	Liabilities		Stockholders Equity		Income Statement	Statement of Cash Flow
Transactions	Cash	+	Supplies	=	Accounts Payable	+	Unearned Revenue	+	Retained earnings		Revenue	-	Expense	=	Net Income
1			1,500		1,500											NA
2	36,000						36,000									OA
3	84,000										84,000					OA
4	-32,000												32,000			OA
5	-8,000								-8,000							FA
6	-1,200				-1,200											OA
7			-1,350										1,350			NA
8							-33,000				33,000					NA
Total	78,800		150	0	300	0	3,000	0	-8,000	0	117,000		33,350		83,650