The following events concern Anita Letourneau, a Manitoba law school graduate, for March 2014: 1. On March

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The following events concern Anita Letourneau, a Manitoba law school graduate, for March 2014:

1. On March 4, she spent $20 on a lottery ticket.

2. On March 7, she won $250,000 in the lottery and immediately quit her job as a junior lawyer.

3. On March 10, she decided to open her own law practice, and deposited $50,000 of her winnings in a business chequing account, Letourneau Legal Services.

4. On March 14, she purchased a new luxury condominium with a down payment of $150,000 from her personal funds plus a home mortgage of $200,000.

5. On March 15, Ms. Letourneau signed a rental agreement for her law office space for $2,500 a month, starting March 15. She paid the first month's rent, as it is due on the 15th of each month.

6. On March 19, she hired a receptionist. He will be paid $500 a week and will begin working on March 24.

7. On March 20, she purchased equipment for her law practice from a company that had just declared bankruptcy.

The equipment was worth at least $15,000 but Anita was able to buy it for only $10,000.

8. On March 21, she purchased $400 of supplies on account.

9. On March24, she purchased an additional $6,500 of equipment for her law practice for $3,000 plus a $3,500 note payable due in six months.

10. On March 31, she performed $3,500 of legal services on account.

11. On March 31, she received $2,500 cash for legal services to be provided in April.

12. On March 31, she paid her receptionist $500 for the week.

13. On March 31, she paid $400 for the supplies purchased on account on March 21.

Instructions

(a) Prepare a tabular analysis of the effects of the above transactions on the accounting equation.

(b) Calculate profit and owner's equity for the month ended March 31.

(c) Prepare a balance sheet at March 31.

TAKING IT FURTHER How should Anita determine which transactions should be recorded and which ones should not be recorded?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Related Book For  book-img-for-question

Accounting Principles Part 1

ISBN: 978-1118306789

6th Canadian edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow

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