I need help answering number 8. Hart, Attorney at Law, experienced the following

Question

I need help answering number 8.

Hart, Attorney at Law, experienced the following transactions in 2018, the first year of operations:

1. Accepted $15,300 on April 1, 2018, as a retainer for services to be performed evenly over the next 12 months.

2. Performed legal services for cash of $60,500.

3. Purchased $1,150 of office supplies on account.

4. Paid $1,035 of the amount due on accounts payable.

5. Paid a cash dividend to the stockholders of $5,000.

6. Paid cash for operating expenses of $20,800.

7. Determined that at the end of the accounting period $130 of office supplies remained on hand.

8. On December 31, 2018, recognized the revenue that had been earned for services performed in accordance with Transaction 1.

Required

Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. Use NA to indicate accounts not affected by the event. The first event has been recorded as an example. (Do not round intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign.)

HART, ATTORNEY AT LAW Effect of Transactions on the Financial Statements for 2018 Assets = Liabilities + Stockholders' Equity Income Statement Event No. Cash + Supplies = Accounts Payable + Unearned Revenue + Retained Earnings Revenue – Expense = Net Income Statement of Cash Flow 1. 15,300 + = + 15,300 + – = 15,300 OA 2. 60,500 + 0 = 0 + 0 + 60,500 60,500 – 0 = 60,500 60,500 OA 3. 0 + 1,150 = 1,150 + 0 + 0 0 – 0 = 0 0 NA 4. (1,035) + 0 = (1,035) + 0 + 0 0 – 0 = 0 (1,035) OA 5. (5,000) + 0 = 0 + 0 + (5,000) 0 – 0 = 0 (5,000) FA 6. (20,800) + 0 = 0 + 0 + (20,800) 0 – 20,800 = (20,800) (20,800) OA 7. 0 + (1,020) = 0 + 0 + (1,020) 0 – 1,020 = (1,020) 0 NA 8. + = + + – = NA Totals 48,965 + 130 = 115 + 15,300 + 33,680 60,500 – 21,820 = 38,680 48,965

Explanation / Answer

Event Cash + Supplies = Acc.Payable + Uneared rev. + RE   Revenue - Expense = Net income Statement of CF 1 15300 15300 15300 OA 2 60500 60500 60500 60500 OA 3 1150 1150 0 4 -1035 -1035 -1035 OA 5 -5000 -5000 -5000 FA 6 -20800 20800 -20800 -20800 OA 7 -1020 1020 -1020 0 8 -1275 1275 1275 0 Total 48965 130 115 14025 -5000 61775 21820 39955 48965

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