Aleda Marek recently opened a law office on December 1, which operates as a sole proprietorship. The name of the new entity is Aleda Marek, Attorney. Marek experienced the following events during the organizing phase of the new business and its first month of operation, December 2025. 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.

Requirements 

1. Analyze the effects of the preceding events on the accounting equation of Aleda Marek, Attorney. Use a format similar to Exhibit F:1-5.
2. Prepare the following financial statements:

a. Income statement for the month ended December 31, 2025.

b. Statement of owner’s equity for the month ended December 31, 2025.

c. Balance sheet as of December 31, 2025.

d. Statement of cash flows for the month ended December 31, 2025.
3. Calculate Aleda Marek, Attorney’s return on assets. Round to the nearest whole percent.

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Dec. 1 Marek sold a personal investment in Nike, Inc. (NYSE: NKE) stock, receiving $33,000 cash. 2 Deposited the $33,000 cash from the sale of the Nike, Inc. stock in a personal bank account. 3 5 7 Deposited $109,000 cash in a new business bank account titled Aleda Marek, Attorney. The business gave capital to Marek. Paid $900 cash for supplies. Purchased computer for the law office, agreeing to pay the account, $9,200, within three months. 9 Received $3,000 cash from customers for services rendered. 15 Received bill from The Lawyer for magazine subscription, $80. (Use Miscellaneous Expense account.) 23 28 Finished court hearings on behalf of a client and submitted a bill for legal services, $17,000, on account. Paid bill from The Lawyer. 30 Paid utilities, $1,900. Received $4,000 cash from clients billed on Dec. 23. 31 31 Marek withdrew cash of $5,000.