Aaron Woody recently opened his own accounting firm, which he operates as a corporation. The name of the new entity is Aaron Woody, CPA. Woody experienced the following events during the organizing phase of the new business and its first month of operations in 2014.
Feb. 5 Woody deposited $ 31,000 in a new business bank account titled Aaron Woody, CPA. The business issued common stock to Woody.
6 Paid $ 200 cash for letterhead stationery for new office.
7 Purchased office furniture for the office on account, $ 9,500.
10 Consulted with tax client and received $ 3,000 for services rendered.
11 Paid utilities, $ 150.
12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, $ 14,000.
18 Paid office rent, $ 1,900.
25 Received amount due from client that was billed on February 12.
27 Paid full amount of accounts payable created on February 7.
28 Cash dividends of $ 8,000 were paid to stockholders.
1. Analyze the effects of the events on the accounting equation of Aaron Woody, CPA. Use a format similar to Exhibit.
2. Prepare the following financial statements:
a. Income statement.
b. Statement of retained earnings.
c. Balance sheet.