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

Answer 1

First, Classify each transaction in to income statement or balance sheet or retained earnings

Each transaction has two effects. One is debit and another credit

Each transaction will be accounted in income statement or balance sheet

In case of amazon stock, it is a personal transaction which shall not be accounted in business transactions.

Please go through the following attachment for solution.