Question

Record the transactions below, similar to your Practice Set, and prepare financial statements. Record the answers to the questions in the separate Excel answer sheet. Do not upload your worksheets or calculations, as only the answers to the questions below will be graded. Assume the accrual basis of accounting under which revenues are recorded in the period earned and expenses in the period incurred.

Transactions During the Month of October:

1. After graduating from law school, Heidi worked for a law firm for a couple of years to get her feet wet. Now she is ready to open her own law practice. She invested $10,500 of her personal cash into a sole-proprietorship business that she just started.

2. Found a good office location and wrote a $1,900 check to pay for October’s rent of $950 and a security deposit of $950.

3. Bought office furniture and equipment for $6,000 on account (will pay for it later).

4. Wrote a check to purchase office supplies for $500. These supplies will be mostly be used in future months.

5. Wrote a real estate contract and promissory note for her first client, ABC Construction, and billed $1,200, due no later than 30 days. [BTW: Heidi charges $240 per hour, which is typically of many law firms.]

6. Completed estate planning and a will for an elderly couple, Mr. and Mrs. Smith. Billed the Smith’s $840.

7. Received a check from ABC Construction for $750 with a note that the rest would be paid later.

8. Wrote a $300 check to the city for October’s garbage/water/sewer bill.

9. Paid the $60 internet bill for October.

10. Paid $5,000 on the office store account for the furniture and equipment purchased in transaction #3 above.

11. Recorded one month’s depreciation of $50 on the furniture & equipment, which is expected to last 10 years. (The cost of the furniture and equipment will be spread over its life, per the Matching Principle of GAAP).

12. Withdrew $1,000 cash from the business to pay personal expenses (got to eat to live so you can live to eat).

13. Looked at the office supplies at the end of the month and determined that $100 of supplies was used during October ($400 was still left-over).

Questions:

1. What were total revenues/income for October [not net income but total income/revenue]?

2. What were total expenses for October?

3. What were total owner contributions for October?

4. What were total owner withdrawals for October?

5. What were total assets at the end of October?

6. What were total liabilities at the end of October?

Answer 1

Questions:
1. What were total revenues/income for October?	2,040
2. What were total expenses for October?	1,460
3. What were total owner contributions for October?	10,500
4. What were total owner withdrawals for October?	1,000
5. What were total assets at the end of October?	11,080
6. What were total liabilities at the end of October?	1,000