Using the accounting equation for transaction analysis and preparing financial statementsAbby Perry recently opened her own law office on December 1, which she operates as a corporation. The name of the new entity is Abby Perry, Attorney. Perry experienced the following events during the organizing phase of the new business and its first month of operation, December 2018. 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.RequirementsAnalyze the effects of the preceding events on the accounting equation of Abby Perry, Attorney. Use a format similar to Exhibit 1-6.Prepare the following financial statements:a. Income statement.b. Statement of retained earnings.c. Balance sheet.d. Statement of cash flows. Dec. 1Sold personal investment in Nike stock, which she had owned for severalyears, receiving $30,000 cash.Deposited the $30,000 cash from the sale of the Nike stock in herpersonal bank account.2.Deposited $89,000 cash in a new business bank account titled Abby Perry,Attorney. The business issued common stock to Perry.Paid $600 cash for ink car:ridges for the printer.Purchased computer for the law office, agreeing to pay the account,$8,000, within three months.Received $2,900 cash from customers for services rendered.15Received bill trom The Lawyer tor magazine subscription, $300. (UseMiscellaneous Expense account.)Finished court hearings on behalf of a client and submitted a bill for legalservices, $8,000, on account.23Paid bill from The Lawyer.28Paid utilities, $900.3031Received $2,800 cash from clients billed on Dec. 23.Cash dividends of $3,000 were paid to stockholders.319.

1. Analyze the effects of the preceding events on the accounting equation of A P, Attorney:

Answered: Dec. 1 Sold personal investment in Nike…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter1: Business Transactions (ptrans)

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Using the accounting equation for transaction analysis and preparing financial statements

Abby Perry recently opened her own law office on December 1, which she operates as a corporation. The name of the new entity is Abby Perry, Attorney. Perry experienced the following events during the organizing phase of the new business and its first month of operation, December 2018. 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.

Requirements

Analyze the effects of the preceding events on the accounting equation of Abby Perry, Attorney. Use a format similar to Exhibit 1-6.
Prepare the following financial statements:

a. Income statement.

b. Statement of retained earnings.

c. Balance sheet.

d. Statement of cash flows.

Dec. 1
Sold personal investment in Nike stock, which she had owned for several
years, receiving $30,000 cash.
Deposited the $30,000 cash from the sale of the Nike stock in her
personal bank account.
2.
Deposited $89,000 cash in a new business bank account titled Abby Perry,
Attorney. The business issued common stock to Perry.
Paid $600 cash for ink car:ridges for the printer.
Purchased computer for the law office, agreeing to pay the account,
$8,000, within three months.
Received $2,900 cash from customers for services rendered.
15
Received bill trom The Lawyer tor magazine subscription, $300. (Use
Miscellaneous Expense account.)
Finished court hearings on behalf of a client and submitted a bill for legal
services, $8,000, on account.
23
Paid bill from The Lawyer.
28
Paid utilities, $900.
30
31
Received $2,800 cash from clients billed on Dec. 23.
Cash dividends of $3,000 were paid to stockholders.
31
9.

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