Chapter 1, Problem P1.53BPGB

Using the accounting equation for transaction analysis and preparing financial statements
Learning Objectives 4, 5
2c. Total Assets $103,700
Abby Perry recently opened her own law office on December 1, which she operates as a sole proprietorship. The name of the new entity is Abby Perry, Attorney. Perry experienced the following events during the organizing phase of the new business and its first month of operation, December 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.

Dec. 1	Sold personal investment in Nike stock, which she had owned for several years, receiving $30,000 cash.
2	Deposited the $30,000 cash from the sale of the Nike stock in her personal bank account.
3	Deposited $89,000 cash in a new business bank account titled Abby Perry, Attorney. The business gave capital to Perry.
5	Paid $600 cash for ink cartridges for the printer.
7	Purchased computer for the law office, agreeing to pay the account, $8,000, within three months.
9	Received $2,900 cash from customers for services rendered.
15	Received bill from The Lawyer for magazine subscription, $300. (Use Miscellaneous Expense account.)
23	Finished court hearings on behalf of a client and submitted a bill for legal services. $8,000, on account.
28	Paid bill from The Lawyer.
30	Paid utilities, $900.
31	Received $2,800 cash from clients billed on Dec. 23.
31	Perry withdrew cash of $3,000.

Requirements

1. Analyze the effects of the preceding events on the accounting equation of Abby Perry, Attorney. Use a format similar to Exhibit 1−5.
2. Prepare the following financial statements:

a. Income statement.
b. Statement of owner's equity.
c. Balance sheet.
d. Statement of cash flows.