46PGA_2c - Horngren'S Financial And Managerial Accounting

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. Requirements 2. Prepare the following financial statements: c. Balance sheet. d. Statement of cash flows

Step-by-Step Solution

Answer

The total assets of the company is equal to its total liabilities and stockholders’ equity at $83,700.

Explanation on Balance Sheet

Balance sheet reports or indicates the ending balances of assets, liabilities, and owners’ equity at the end of a particular accounting period.

Details of balance sheet

In the balance sheet, total assets equals $83,700, total liabilities equals $5,000, and total stockholders’ equity equals $78,700. 

Annette Pachelo, Attorney
Balance Sheet
March 31, 2018
Assets	Liabilities
Cash	$71,300	Accounts Payable	$5,000
Accounts Receivable	6,700
Office Supplies	700
Office Equipment	5,000	Stockholders’ Equity
		Common Stock	73,000
		Retained Earnings	5,700
		Total Stockholders’ Equity	$78,700
Total Assets	$83,700	Total Liabilities and Stockholders’ Equity	$83,700