AbbyAbby PrimrosePrimrose recently opened her own law office, which she operates

Question

AbbyAbby

PrimrosePrimrose

recently opened her own law office, which she operates as a sole proprietorship. The name of the new entity is

AbbyAbby

PrimrosePrimrose,

Attorney.

PrimrosePrimrose

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

MarchMarch

20162016.

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.

Sold personal investment in Amazon stock, which she had owned for several years, receiving $ 31 comma 000$31,000 cash. 2 Deposited the $ 31 comma 000$31,000 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 AbbyAbby PrimrosePrimrose, Attorney. The business gave capital to PrimrosePrimrose. 5 Paid $ 500$500 cash for ink cartridges for the printer. 7 Purchased computer for the law office, agreeing to pay the account, $ 7 comma 500$7,500, within three months. 9 Received $ 3 comma 800$3,800 cash from customers for services rendered. 15 Received bill from The Lawyer for magazine subscription, $ 150$150. (Use Miscellaneous Expense account.) 23 Finished court hearings on behalf of a client and submitted a bill for legal services, $ 11 comma 000$11,000, on account. 28 Paid bill from The Lawyer. 30 Paid utilities, $ 1 comma 200$1,200. 3131 Received $ 3 comma 300$3,300 cash from clients billed on Mar.Mar. 23. 3131 PrimrosePrimrose withdrew cash of $ 3 comma 000$3,000.

Explanation / Answer

Answer

Sold personal investment in Amazon stock, which she had owned for several years, receiving $31,000 cash.

Personal Transaction (No Journal Entry)

2 Deposited the $31,000 cash from the sale of the Amazon stock in her personal bank account.

Personal Transaction (No Journal Entry)

3 Deposited $60,000 cash in a new business bank account titled Abby Primrose, Attorney. The business gave capital to Primrose.

Cash A/c Dr. $60,000

             To Capital A/c Cr. $60,000

5 Paid $500 cash for ink cartridges for the printer.

Printer ink Cartridges Expenses A/c Dr. $ 500

                                                            To Cash A/c Cr. $ 500

7 Purchased computer for the law office, agreeing to pay the account $7,500, within three months.

Computer A/c Dr. $7,500

             To Payables for computer A/c Cr. $7,500

9 Received $3,800 cash from customers for services rendered.

Cash A/c Dr. $3,800

              To Service revenues A/c Cr. $3,800

15 Received bill from The Lawyer for magazinesubscription, $150. (Use Miscellaneous Expenseaccount.)

Miscellaneous expense A/c Dr. $150

                                 To Expense payable A/c Cr. $150

23 Finished court hearings on behalf of a client and submitted a bill for legalservices, $11,000, on account.

Service Receivable A/c Dr. $11,000

                       To Service Revenue A/c Cr. $11,000

28 Paid bill from The Lawyer.

Expense payable A/c Dr. $150

                         To Cash A/c Cr. $150

30 Paidutilities,$1,200.

Utilities Expense A/c Dr. $1,200.

                   To Cash A/c Cr. $ 1,200

31 Received $3,300 cash from clients billed on Mar. 23.

Cash A/c Dr. $3,300

               To Service Receivables A/c Cr. $3,300

31 Primrose withdrew cash of $3,000.

Capital A/c Dr. $ 3000

               To Cash A/c Cr. $ 3,000

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