Hart, Attorney at Law, Experienced the following transactions in 2018, the first
ID: 2549703 • Letter: H
Question
Hart, Attorney at Law, Experienced the following transactions in 2018, the first year of operations.
1. Accepted $18,600 on April 1, 2018 as a retainer for services to be performed evenly over the next 12 months.
2. Performed legal services for cash of $68,000
3. Purchased $1,150 of office supplies on account.
4. Paid $1035 of the amount due on accounts payable.
5. Paid a cash dividend to the stockholders of $5,100
6. Paid cash for operating expenses of $21,000
7. Determined that at the end of the accounting period $100 of office supplies remained on hand.
8. On December 31, 2018, recognized the revenue that had been earned for services performed on accordance with Transaction 1.
Required
Show the effects of the events on the financial statements using a horizontal statement model. In the cash flow column, use the initials OA to designate 'operating activity'; IA for 'investing activity'; FA for 'financial activity'; and NC for 'net change in cash'. Use NA to indicate accounts not affected by the even
Explanation / Answer
Assets
Liabilities
Equity
Income Statement
No.
Cash
Supplies
Accounts Payable
Unearned Revenue
Equity+Retained Earnings
Revenue
Expenses
Net Income
Statement of Cash flows
1
18600
18600
18600 OA
2
68000
68000
68000
0
68000
68999 OA
3
0
1150
1150
0
0
0
0
0
0 NA
4
-1035
0
-1035
0
0
0
0
0
-1035 OA
5
-5100
-5100
-5100 FA
6
-21000
-21000
21000
-21000
-21000 OA
7
-1050
-1050
0
1050
-1050
0 NA
8
-18600
18600
18600
0
18600
0 NA
Total
59465
100
115
0
59450
86600
22050
64550
Assets
Liabilities
Equity
Income Statement
No.
Cash
Supplies
Accounts Payable
Unearned Revenue
Equity+Retained Earnings
Revenue
Expenses
Net Income
Statement of Cash flows
1
18600
18600
18600 OA
2
68000
68000
68000
0
68000
68999 OA
3
0
1150
1150
0
0
0
0
0
0 NA
4
-1035
0
-1035
0
0
0
0
0
-1035 OA
5
-5100
-5100
-5100 FA
6
-21000
-21000
21000
-21000
-21000 OA
7
-1050
-1050
0
1050
-1050
0 NA
8
-18600
18600
18600
0
18600
0 NA
Total
59465
100
115
0
59450
86600
22050
64550
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