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Hart, Attorney at Law, experienced the following transactions in Year 1, the first year of operations: 1. Accepted $17,500 on April 1, Year 1, as a retainer for services to be performed evenly over the next 12 months. 2. Performed legal services for cash of $69,500. 3. Purchased $1,150 of office supplies on account. 4. Paid $1,035 of the amount due on accounts payable. 5. Paid a cash dividend to the stockholders of $5,600. 6. Paid cash for operating expenses of $20,100. 7. Determined that at the end of the accounting period $120 of office supplies remained on hand. 8. On December 31, Year 1, recognized the revenue that had been earned for services performed in accordance with Transaction 1. Required: Show the effects of the events on the financial statements using a horizontal statements model. The first event has been recorded as an example. Note: In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. Do not round intermediate calculations. Enter any decreases to account

Hart, Attorney at Law, experienced the following transactions in Year 1, the first year of operations: 1. Accepted $17,500 on April 1, Year 1, as a retainer for services to be performed evenly over the next 12 months. 2. Performed legal services for cash of $69,500. 3. Purchased $1,150 of office supplies on account. 4. Paid $1,035 of the amount due on accounts payable. 5. Paid a cash dividend to the stockholders of $5,600. 6. Paid cash for operating expenses of $20,100. 7. Determined that at the end of the accounting period $120 of office supplies remained on hand. 8. On December 31, Year 1, recognized the revenue that had been earned for services performed in accordance with Transaction 1. Required: Show the effects of the events on the financial statements using a horizontal statements model. The first event has been recorded as an example. Note: In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. Do not round intermediate calculations. Enter any decreases to account

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hart, Attorney at Law, experienced the following transactions in Year 1, the first year of operations: 1. Accepted $17,500 on April 1, Year 1, as a retainer for services to be performed evenly over the next 12 months. 2. Performed legal services for cash of $69,500. 3. Purchased $1,150 of office supplies on account. 4. Paid $1,035 of the amount due on accounts payable. 5. Paid a cash dividend to the stockholders of $5,600. 6. Paid cash for operating expenses of $20,100. 7. Determined that at the end of the accounting period $120 of office supplies remained on hand. 8. On December 31, Year 1, recognized the revenue that had been earned for services performed in accordance with Transaction 1. Required: Show the effects of the events on the financial statements using a horizontal statements model. The first event has been recorded as an example. Note: In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. Do not round intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input. Transaction 1. 2. 3. 4. 5. 6. 7. 8. Totals Cash Assets + 17,500 + + + + + + + + 17,500 + Supplies B = = = = = = 0 = HART, ATTORNEY AT LAW Effect of Transactions on the Financial Statements for Year 1 Balance Sheet Liabilities Accounts Payable + + + + + + + + 0+ + Unearned Revenue 17,500 + + + + + + + + 17,500 + Stockholders' Equity Retained Earnings 0 Revenue 0 Income Statement Expense = Net Income = = = = = = 0 = 0 Statement of Cash Flows 17,500 OA 17,500
Transcribed Image Text:Hart, Attorney at Law, experienced the following transactions in Year 1, the first year of operations: 1. Accepted $17,500 on April 1, Year 1, as a retainer for services to be performed evenly over the next 12 months. 2. Performed legal services for cash of $69,500. 3. Purchased $1,150 of office supplies on account. 4. Paid $1,035 of the amount due on accounts payable. 5. Paid a cash dividend to the stockholders of $5,600. 6. Paid cash for operating expenses of $20,100. 7. Determined that at the end of the accounting period $120 of office supplies remained on hand. 8. On December 31, Year 1, recognized the revenue that had been earned for services performed in accordance with Transaction 1. Required: Show the effects of the events on the financial statements using a horizontal statements model. The first event has been recorded as an example. Note: In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. Do not round intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input. Transaction 1. 2. 3. 4. 5. 6. 7. 8. Totals Cash Assets + 17,500 + + + + + + + + 17,500 + Supplies B = = = = = = 0 = HART, ATTORNEY AT LAW Effect of Transactions on the Financial Statements for Year 1 Balance Sheet Liabilities Accounts Payable + + + + + + + + 0+ + Unearned Revenue 17,500 + + + + + + + + 17,500 + Stockholders' Equity Retained Earnings 0 Revenue 0 Income Statement Expense = Net Income = = = = = = 0 = 0 Statement of Cash Flows 17,500 OA 17,500
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