Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
5th Edition
ISBN: 9780134078939
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 1, Problem 1.46AP
Using the
Angela Petrillo recently opened her own law office, which she operates as a corporation. The name of the new entity is Angela Petrillo, Attorney. Petrillo experienced the following events during the organizing phase of the new business and its first month of operation, March 2016. Some of the events were person al and did not affect the law practice. Others were business transactions and should be accounted for by the business.
| Mar. 1 | Sold persona l investment in Amazon stock, which she had owned for several years, receiving $31,000 cash. |
| 2 | Deposited the $31,000 cash from the sale of the Amazon stock in her personal bank account. |
| 3 | Deposited $72,000 cash in a new business bank account titled Angela Petrillo, Attorney. The business issued common stock to Petrillo. |
| 5 | Paid $350 cash for ink cartridges for the printer. |
| 7 | Purchased computer for the law office, agreeing to pay the account, $5,500, within three months. |
| 9 | Received $2,500 cash from customers for services rendered. |
| 15 | Received bill from The Lawyer for magazine subscription, $340. (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, $1,300. |
| 31 | Received $1,800 cash from clients billed on Mar. 23. |
| 31 | Cash dividends of $2,000 were paid to stockholders. |
Requirements
- 1. Analyze the effects of the preceding events on the accounting equation of Angela Petrillo, Attorney. Use a format similar to Exhibit 1-6.
- 2. Prepare the following financial statements:
- a. Income statement.
- b. Statement of
retained earnings . - c. Balance sheet.
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Using the accounting equation for transaction analysis and preparing financial statements
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A few years ago, Sam Gig founded Gig n Spin Consultancy Services. Sam is aware that you and your group members are pursuing an accounting course while in college and therefore has approached the team for advice. He wishes to know how much net income his business earned during the past year in order to decide whether to keep the company going. His accounting records consist a trial balance and some additional notes required to make adjustments to the financial statements. The company unadjusted trial balance for the year ended December 31st, 2015 was shown as follows:
Gig n Spin Consultancy ServicesTrial BalanceDecember 31st 2015DR CRCash 120,000Accounts receivable 65,000Supplies 25,000Lease Hold Improvement 100,000Accumulated depreciation - Leasehold Improvement 40,000Furniture and Fixtures 500,000Accumulated depreciation - Furniture and Fittings 300,000Accounts payable 25,000Salary PayableUnearned service revenue 18,500Sam Gig, Capital 223,200Sam Gig, Withdrawal 148,000Service revenue…
Chapter 1 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
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