Tanner Glass had been operating his law practice in Mississauga under the name Tanner Glass, Lawyer, for two years and had the following business assets and liabilities (at their historical costs) on April 30, 2015:
Cash .................................................. $45,000
Accounts Receivable .......................... 30,000
Supplies ................................................ 2,000
Furniture and Computers .................... 75,000
Accounts Payable ................................ 20,000
The following business transactions took place during the month of May 2015:
May 1 Glass deposited $30,000 cash into the business bank account.
3 Glass completed legal work for a home builder. He charged the builder $5,000, not the $6,000 the work was worth, in order to promote business from the builder.
5 The business bought furniture from Ajax Furniture for $8,000, paying $2,000 cash and promising to pay $1,000 per month at the beginning of each month starting June 1, 2015, for six months. Glass would like to expense the entire amount to reduce net income for tax reasons.
10 The company signed a lease to rent additional space at a cost of $2,000 per month. Glass will occupy the premises effective June 1, 2015
18 Determining that the business would need more cash in June, Glass went to the bank and borrowed $20,000 on a personal loan and transferred the money to the company.
25 Glass purchased a painting for his home from one of his clients. He paid for the $3,000 purchase with his personal credit card.
28 Glass withdrew $5,000 from the business. He used $2,000 of the money to repay a portion of the loan arranged on May 18.
31 The business did legal work with a value of $10,000 for Apex Computers Ltd.
Apex paid for the work by giving the company computer equipment with a selling price of $12,000.
Required
Identify the accounting characteristic, assumption, or principle that would be applicable to each of the transactions and discuss the effects it would have on the financial statements of Tanner Glass, Lawyer.