Question

using the account equation for transaction analysis and preparing financial statement

Allen Shonton recently opened his own accounting firm on April 1, which he operates as a sole proprietorship. The name of the new entity is Allen Shonton, CPA. Shonton experienced the following events during the organizing phase of the new business and its first month of operations in 2018.

April 5- Shonton deposited $75,000 in a new business bank account titled Allen Shonton, CPA. The business gave capital to Shonton.

April 6- Paid $300 cash for letterhead stationery for new office.

April 7- Purchased office furniture for the office on account, $9500 April 10, consulted with tax client and received $4000 for services rendered. April 11, paid $190 for utilities April 12 finished tax hearing on behalf of a client and submitted a bill for accounting services, $20,000 April 18, paid office rent $750 April 25 received amount due from client that was billed on april 12 April 27th paid full amount of accounts payable created april 7th April 30th Ahonton withdrew cash of $3500

1. Analyze the effects of the events on the accounting equation of Allen Shonton, Cpa.

2. Prepare the following financial statements: A. income statement B. Statement of owners equity. C. Balance sheet

Answer 1

1	Date	Assets			=	Liabilities	+	Equity			Expenses				Revenues
		Cash	Office Furniture	Accounts Receivable		Accounts Payable		Shonton's Capital	Shonton's drawings		Printing & Stationery	Utility Expense	Office rent		Service Revenue
	5-Apr	75000						75000
	6-Apr	-300						-300			300
	7-Apr		9500			9500
	10-Apr	4000						4000							4000
	11-Apr	-190						-190				190
	12-Apr			20000				20000							20000
	18-Apr	-750						-750					750
	25-Apr	20000		-20000
	27-Apr	-9500				-9500
	30-Apr	-3500							-3500
	Total	84760	9500	0		0		97760	-3500		300	190	750		24000
2	Income statement
	Revenues:
	Service revenue (A)					24000
	Expenses:
	Printing & Stationery					300
	Utility Expense					190
	Office rent					750
	Total (B)					1240
	Net income (A)-(B)					22760
	Statement of owner's equity:
	Beginning capital balance					0
	Add:Contribution to capital					75000
	Net income for the year					22760
	Ending capital balance					97760
	Less:Withdrawals					3500
	Owner's equity					94260
	Balance sheet
	Assets
	Cash					84760
	Office furniture					9500
	Total					94260
	Liabilities and Owner's equity
	Owner's equity:
	Shonton's Capital		(Refer 1.2)			97760
	Shonton's drawings					-3500
	Total					94260