Question

AvaAva

PetrilloPetrillo

recently opened her own law office on

MarchMarch

?1, which she operates as a corporation. The name of the new entity is

AvaAva

PetrilloPetrillo?,

Attorney.

PetrilloPetrillo

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

MarchMarch

20182018.

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.Mar.???1		Sold personal investment in Amazon? stock, which she had owned for several? years, receiving $ 33 comma 000$33,000 cash.
2		Deposited the $ 33 comma 000$33,000 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 AvaAva PetrilloPetrillo?, Attorney. The business issued common stock to PetrilloPetrillo.
5		Paid $ 450$450 cash for ink cartridges for the printer.
7		Purchased computer for the law? office, agreeing to pay the? account, $ 7 comma 000$7,000?, within three months.
9		Received $ 3 comma 100$3,100 cash from customers for services rendered.
15		Received bill from The Lawyer for magazine? subscription, $ 200$200. ?(Use Miscellaneous Expense? account.)
23		Finished court hearings on behalf of a client and submitted a bill for legal? services, $ 12 comma 000$12,000?, on account.
28		Paid bill from The Lawyer.
30		Paid? utilities, $ 1 comma 300$1,300.
3131		Received $ 1 comma 000$1,000 cash from clients billed on MarchMarch 23.
3131		Cash dividends of $ 3 comma 000$3,000 were paid to stockholders.

.	Analyze the effects of the preceding events on the accounting equation of AvaAva PetrilloPetrillo?, Attorney.
2.	Prepare the following financial? statements: a. Income statement. b. Statement of retained earnings. c. Balance sheet. d. Statement of cash flows.

.

Requirement 1. Analyze the effects of the preceding events on the accounting equation of

AvaAva

PetrilloPetrillo?,

Attorney.Analyze the events? chronologically, one transaction at a time. Beginning with the transaction on the? 2nd, calculate the balance in each account after analyzing the effect of the transaction on the accounting equation. After calculating the ending balance of each account on the

3131?st,

calculate total assets and total liabilities and equity. ?(Complete only the necessary answer boxes for your transaction lines. If a transaction is personal and does not affect the? business, leave the transaction line blank. Carry down all balances to the? "Bal." line, including zero balance? accounts, entering a? "0" for any zero balances. Enter a decrease in an account with a minus sign or parentheses. Abbreviations? used: A/P? = Accounts? Payable; A/R? = Accounts? Receivable; Com.? = Common; Contr. Cap.? = Contributed? Capital; Div.? = Dividends; Comp.? = Computer; Exp.? = Expense; Liab.? = Liabilities; Misc.? = Miscellaneous; Rev.? = Revenue; Sup.? = Supplies; Util.? = Utilities.)

ASSETS

=

LIAB.

+

EQUITY

Contr.

Cap.

+

Retained Earnings

Cash

+

A/R

+

Office

+

Comp.

=

A/P

+

Com.

-

Div.

+

Service

-

Util.

-

Misc.

Sup.

Stock

Rev.

Exp.

Exp.

3/1

72,000

+

+

+

=

+

-

+

-

-

3/2

+

+

+

=

+

-

+

-

-

Bal.

+

+

+

=

+

-

+

-

-

Answer 1

Answer 1.
Date	Assets							=	Liabilities	+	Stockholders' Equity
											Contr. Cap.	+	Retained Earnings
	Cash	+	Accounts Receivable	+	Office Supplies	+	Comp.	=	Accounts Payable	+	Common Stock	-	Div.	+	Service Revenue	-	Util. exp.	-	Misc. Exp.
1-Mar	-	+	-	+	-	+	-	=	-	+	-	-	-	+	-	-	-	-	-
2-Mar	-	+	-	+	-	+	-	=	-	+	-	-	-	+	-	-	-	-	-
3-Mar	60,000.00	+		+		+		=		+	60,000.00	-		+		-		-
5-Mar	(450.00)	+		+	450.00	+		=		+		-		+		-		-
7-Mar		+		+		+	7,000.00	=	7,000.00	+		-		+		-		-
9-Mar	3,100.00	+		+		+		=		+		-		+	3,100.00	-		-
15-Mar		+		+		+		=	200.00	+		-		+		-		-	200.00
23-Mar		+	12,000.00	+		+		=		+		-		+	12,000.00	-		-
28-Mar	(200.00)	+		+		+		=	(200.00)	+		-		+		-		-
30-Mar	(1,300.00)	+		+		+		=		+		-		+		-	1,300.00	-
31-Mar	1,000.00	+	(1,000.00)	+		+		=		+		-		+		-		-
31-Mar	(3,000.00)	+		+		+		=		+		-	3,000.00	+		-		-
		+		+		+		=		+		-		+		-		-
Total	59,150.00	+	11,000.00	+	450.00	+	7,000.00	=	7,000.00	+	60,000.00	-	3,000.00	+	15,100.00	-	1,300.00	-	200.00
	Total Assets = $77,600							=	Total Liabilities = $7,000	+	Total stockholders' Equity = $70,600
								=	Total Liabilities & stockholders' Equity = $77,600

Answer 2.
Income Statement
For the Month Ended Mar 31, 2018
Revenue
Service Revenue		15,100.00
Expenses
Utilities Expenses	1,300.00
Miscellaneous Expenses	200.00	1,500.00
Net Income		13,600.00
Retained Earning Statement
For the Month Ended Mar 31, 2018
Beginning Balance	-
Net Income	13,600.00
Dividend	(3,000.00)
Ending Balance - Mar 31, 2018	10,600.00
Balance Sheet
Mar 31, 2018
Assets
Current Assets
Cash	59,150.00
Accounts Receivable	11,000.00
Office Supplies	450.00
Total Current Assets		70,600.00
Property, Plant & Equipment
Comp.		7,000.00
Total Assets		77,600.00
Liabilities & Stockholders' Equity
Liabilities
Current Liabilities
Accounts Payable		7,000.00
Long-Term Liabilities		-
Total Liabilities
Stockholders' Equity
Common Stock	60,000.00
Retained Earnings	10,600.00
Total Stockholders' Equity		70,600.00
Total Liabilities & Stockholders' Equity		77,600.00
Statement of Cash Flows (Indirect Method)
For the Month ended Mar 31, 2018
Cash Flow from opearating activities:
Net Income		13,600
Add/(Less) non cash effects on operating activities
Increase in Accounts Receivables	(11,000)
Increase in Office Supplies	(450)
Increase in Accounts Payables	7,000	(4,450)
Net Cash provided by operating activities		9,150
Cash flow from Investing Activities
Purchase of Comp.	(7,000)
Net Cash provided by Investing activities		(7,000)
Cash Flow from Financing Activities
Issue of Common Stock	60,000
Cash dividend paid	(3,000)
Net Cash used by Financing activities		57,000
Net Increase / (Decrease) in Cash		59,150
Cash balance at the beginning - Mar 1, 2018		-
Cash balance at the end - Mar 31, 2018		59,150