AvaAva PetrilloPetrillo recently opened her own law office o

AvaAva

PetrilloPetrillo

recently opened her own law office on

MarchMarch

?1, which she operates as a corporation. The name of the new entity is

AvaAva

PetrilloPetrillo?,

Attorney.

PetrilloPetrillo

experienced the following events during the organizing phase of the new business and its first month of? operation,

MarchMarch

20182018.

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.

Mar.Mar.???1

$ 33 comma 000$33,000

2

$ 33 comma 000$33,000

3

$ 60 comma 000$60,000

AvaAva

PetrilloPetrillo?,

PetrilloPetrillo.

5

$ 450$450

7

$ 7 comma 000$7,000?,

9

$ 3 comma 100$3,100

15

$ 200$200.

23

$ 12 comma 000$12,000?,

28

Lawyer.

30

$ 1 comma 300$1,300.

3131

$ 1 comma 000$1,000

MarchMarch

3131

$ 3 comma 000$3,000

were paid to stockholders.

.

AvaAva

PetrilloPetrillo?,

2.

Prepare the following financial? statements:

a. Income statement.

b. Statement of retained earnings.

c. Balance sheet.

d. Statement of cash flows.

.

Requirement 1. Analyze the effects of the preceding events on the accounting equation of

AvaAva

PetrilloPetrillo?,

Attorney.Analyze the events? chronologically, one transaction at a time. Beginning with the transaction on the? 2nd, calculate the balance in each account after analyzing the effect of the transaction on the accounting equation. After calculating the ending balance of each account on the

3131?st,

calculate total assets and total liabilities and equity. ?(Complete only the necessary answer boxes for your transaction lines. If a transaction is personal and does not affect the? business, leave the transaction line blank. Carry down all balances to the? \"Bal.\" line, including zero balance? accounts, entering a? \"0\" for any zero balances. Enter a decrease in an account with a minus sign or parentheses. Abbreviations? used: A/P? = Accounts? Payable; A/R? = Accounts? Receivable; Com.? = Common; Contr. Cap.? = Contributed? Capital; Div.? = Dividends; Comp.? = Computer; Exp.? = Expense; Liab.? = Liabilities; Misc.? = Miscellaneous; Rev.? = Revenue; Sup.? = Supplies; Util.? = Utilities.)

ASSETS

=

LIAB.

+

EQUITY

Contr.

Cap.

+

Retained Earnings

Cash

+

A/R

+

Office

+

Comp.

=

A/P

+

Com.

-

Div.

+

Service

-

Util.

-

Misc.

Sup.

Stock

Rev.

Exp.

Exp.

3/1

72,000

+

+

+

=

+

-

+

-

-

3/2

+

+

+

=

+

-

+

-

-

Bal.

+

+

+

=

+

-

+

-

-

Mar.Mar.???1		Sold personal investment in Amazon? stock, which she had owned for several? years, receiving $ 33 comma 000$33,000 cash.
2		Deposited the $ 33 comma 000$33,000 cash from the sale of the Amazon stock in her personal bank account.
3		Deposited $ 60 comma 000$60,000 cash in a new business bank account titled AvaAva PetrilloPetrillo?, Attorney. The business issued common stock to PetrilloPetrillo.
5		Paid $ 450$450 cash for ink cartridges for the printer.
7		Purchased computer for the law? office, agreeing to pay the? account, $ 7 comma 000$7,000?, within three months.
9		Received $ 3 comma 100$3,100 cash from customers for services rendered.
15		Received bill from The Lawyer for magazine? subscription, $ 200$200. ?(Use Miscellaneous Expense? account.)
23		Finished court hearings on behalf of a client and submitted a bill for legal? services, $ 12 comma 000$12,000?, on account.
28		Paid bill from The Lawyer.
30		Paid? utilities, $ 1 comma 300$1,300.
3131		Received $ 1 comma 000$1,000 cash from clients billed on MarchMarch 23.
3131		Cash dividends of $ 3 comma 000$3,000 were paid to stockholders.

Solution

Answer 1. Date Assets = Liabilities + Stockholders\' Equity Contr. Cap. + Retained Earnings Cash + Accounts Receivable + Office Supplies + Comp. = Accounts Payable + Common Stock - Div. + Service Revenue - Util. exp. -   Misc. Exp. 1-Mar                      -   +                     -   +                  -   +                        -   =                        -   +                       -   -                      -   +                     -   -                     -   -                     -   2-Mar                      -   +                     -   +                  -   +                        -   =                        -   +                       -   -                      -   +                     -   -                     -   -                     -   3-Mar       60,000.00 + + + = +       60,000.00 - + - - 5-Mar          (450.00) + +         450.00 + = + - + - - 7-Mar + + +           7,000.00 =           7,000.00 + - + - - 9-Mar         3,100.00 + + + = + - +        3,100.00 - - 15-Mar + + + =               200.00 + - + - -            200.00 23-Mar +      12,000.00 + + = + - +      12,000.00 - - 28-Mar          (200.00) + + + =             (200.00) + - + - - 30-Mar       (1,300.00) + + + = + - + -        1,300.00 - 31-Mar         1,000.00 +      (1,000.00) + + = + - + - - 31-Mar       (3,000.00) + + + = + -         3,000.00 + - - + + + = + - + - - Total       59,150.00 +      11,000.00 +         450.00 +           7,000.00 =           7,000.00 +       60,000.00 -         3,000.00 +      15,100.00 -        1,300.00 -            200.00 Total Assets = $77,600 = Total Liabilities = $7,000 + Total stockholders\' Equity = $70,600 = Total Liabilities & stockholders\' Equity = $77,600 Answer 2. Income Statement For the Month Ended Mar 31, 2018 Revenue Service Revenue      15,100.00 Expenses Utilities Expenses        1,300.00 Miscellaneous Expenses            200.00        1,500.00 Net Income      13,600.00 Retained Earning Statement For the Month Ended Mar 31, 2018 Beginning Balance                     -   Net Income      13,600.00 Dividend      (3,000.00) Ending Balance - Mar 31, 2018      10,600.00 Balance Sheet Mar 31, 2018 Assets Current Assets Cash      59,150.00 Accounts Receivable      11,000.00 Office Supplies            450.00 Total Current Assets      70,600.00 Property, Plant & Equipment Comp.        7,000.00 Total Assets      77,600.00 Liabilities & Stockholders\' Equity Liabilities Current Liabilities Accounts Payable        7,000.00 Long-Term Liabilities                     -   Total Liabilities Stockholders\' Equity Common Stock      60,000.00 Retained Earnings      10,600.00 Total Stockholders\' Equity      70,600.00 Total Liabilities & Stockholders\' Equity      77,600.00 Statement of Cash Flows (Indirect Method) For the Month ended Mar 31, 2018 Cash Flow from opearating activities: Net Income            13,600 Add/(Less) non cash effects on operating activities Increase in Accounts Receivables          (11,000) Increase in Office Supplies                (450) Increase in Accounts Payables              7,000            (4,450) Net Cash provided by operating activities              9,150 Cash flow from Investing Activities Purchase of Comp.            (7,000) Net Cash provided by Investing activities            (7,000) Cash Flow from Financing Activities Issue of Common Stock            60,000 Cash dividend paid            (3,000) Net Cash used by Financing activities            57,000 Net Increase / (Decrease) in Cash            59,150 Cash balance at the beginning - Mar 1, 2018                     -   Cash balance at the end - Mar 31, 2018            59,150