Question

Annette Pachelo recently opened her own law office on March ​1, which she operates as a corporation. The name of the new entity is Annette Pachelo​, Attorney. Pachelo experienced the following events during the organizing phase of the new business and its first month of​ operation, March 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. Mar. 1.Sold personal investment in Amazon​ stock, which she had owned for several​ years, receiving $ 35,000 cash. 2.Deposited the $ 35,000 cash from the sale of the Amazon stock in her personal bank account. 3. Deposited $ 73,000 cash in a new business bank account titled Annette Pachelo​, Attorney. The business issued common stock to Pachelo. 5. Paid $700 cash for ink cartridges for the printer. 7. Purchased computer for the law​ office, agreeing to pay the​account, $ 5,000​, within three months. 9. Received $2,800 cash from customers for services rendered. 15. Received bill from The Lawyer for magazine​ subscription, $400. ​(Use Miscellaneous Expense​ account.) 23. Finished court hearings on behalf of a client and submitted a bill for legal​ services, $ 10,000​, on account. 28. Paid bill from The Lawyer. 30. Paid​ utilities, $1,200. 31. Received $3,300 cash from clients billed on March 23. 31. Cash dividends of $5,500 were paid to stockholders.

Prepare the financial statements. a. Income statement ASSETS = LIAB. + EQUITY Contr. Cap. + Retained Earnings Cash + A/R + Office + Comp. = A/P + Com. - Div. + Service - Util. - Misc. Sup. Stock Rev. Exp. Exp. Bal. 71,300 + 6,700 + 700 + 5,000 = 5,000 + 73,000 - 5,500 + 12,800 - 1,200 - 400 Tot. $ 83,700 = $ 83,700

Answer 1

Annette Pachelo, Attorney
Income Statement
Month ended March 31,2018
Revenue:
Service Revenue		12800
Expenses:
Utilities expense	1200
Miscellaneous expense	400	1600
Net Income		11200

Annette Pachelo, Attorney
Statement of owners equity
Month ended March 31,2018
Pachelo,Capital, March 1, 2018	0
Owner contribution	73000
Net income for the month	11200
	84200
Owners withdrawals	5500
Pachelo,Capital, March 31, 2018	78700

	Annette Pachelo, Attorney
	Balance Sheet
	March 31,2018
Assets		Liabilities
Cash	71300	Accounts Payable	5000
Accounts receivable	6700	Owners equity
Office supplies	700	Pachelo , Capital	78700
Computer	5000
Total assets	83700	Total liabilities and owners equity	83700

Annette Pachelo, Attorney
Statement of cash flows
Month ended March 31,2018
Cash flows from operating activities
Receipts:
Collection from customers		6100
Payments:
To suppliers		2300
Net cash provided by operating activities		3800
Cash flow from investing activities		0
Cash flow from financing activities
Owner contribution	73000
Owner withdrawals	-5500
Net cash provided by financing activities		67500
Net increase in cash		71300
Cash balance, March 1,2018		0
Cash balance, March 31,2018		71300