Using the accounting equation for transaction analysis and preparing financial statementsAmos Sharp recently opened his own accounting firm on October 1, which he operates as a corporation. The name of the new entity is Amos Sharp, CPA. Sharp experienced the following events during the organizing phase of the new business and its first month of operations in 2018.Requirements1. Analyze the effects of the events on the accounting equation of Amos Sharp, CPA. Use a format similar to Exhibit 1-6.2. Prepare the following financial statements:a. Income statement.b. Statement of retained earnings.c. Balance sheet. Oct. 5Sharp deposited $45,000 in a new business bank account titled AmosSharp, CPA. The business issued common stock to Sharp.Paid $300 cash for letterhead stationery for new office.Purchased office furniture for the office on account, $6,500.10Consulted with tax client and received $3,300 for services rendered.Paid utilities, $340.11Finished tax hearings on behalf of a client and submitted a bill foraccounting services, $16,000.12Paid office rent, $1,800.1825Received amount due from client that was billed on October 12.Paid full amount of Accounts Payable created on October 7.2731Cash dividends of $3,800 were paid to stockholders.

Answered: Oct. 5 Sharp deposited $45,000 in a new…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Using the accounting equation for transaction analysis and preparing financial statements

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

Requirements

1. Analyze the effects of the events on the accounting equation of Amos Sharp, CPA. Use a format similar to Exhibit 1-6.

2. Prepare the following financial statements:

a. Income statement.

b. Statement of retained earnings.

c. Balance sheet.

Oct. 5
Sharp deposited $45,000 in a new business bank account titled Amos
Sharp, CPA. The business issued common stock to Sharp.
Paid $300 cash for letterhead stationery for new office.
Purchased office furniture for the office on account, $6,500.
10
Consulted with tax client and received $3,300 for services rendered.
Paid utilities, $340.
11
Finished tax hearings on behalf of a client and submitted a bill for
accounting services, $16,000.
12
Paid office rent, $1,800.
18
25
Received amount due from client that was billed on October 12.
Paid full amount of Accounts Payable created on October 7.
27
31
Cash dividends of $3,800 were paid to stockholders.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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