Question

Refer to Exercise 2-22A.
Set up the following T-accounts: Cash, Accounts Receivable, Office Supplies, Office Furniture, Accounts Payable, Common Stock, Dividends, Service Revenue, Salary Expense, and Rent Expense. Record the following transactions directly in the T-accounts without using a journal. Use the letters to identify the transactions.
a. Stephen Garner opened a law firm by investing $25,000 cash and office furniture with a fair value of $10,400. Organized as a professional corporation, the business issued common stock to Garner.
b. Paid monthly rent of $1,800.
c. Purchased office supplies on account, $1,050.
d. Paid employees’ salaries of $3,600.
e. Paid $500 of the account payable created in transaction c.
f. Performed legal service on account, $10,000.
g. Declared and paid dividends of $3,200.

1. After recording the transactions in Exercise 2-22A, and assuming they all occurred in the month of November 2014, prepare the trial balance of Stephen Garner, Attorney, at November 30, 2014. Use the T-accounts that have been prepared for the business.
2. How well did the business perform during its first month? Compute net income (or net loss) for the month.



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  • CreatedJuly 25, 2014
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