Extra Credit # 2 (15 Points) Joan Robinson opens her own law office on July 1, 2
ID: 2537766 • Letter: E
Question
Extra Credit # 2 (15 Points) Joan Robinson opens her own law office on July 1, 2017. During the first month of operations, the following transactions occurred. 1. Joan invested $11,000 in cash in the law practice. 2. Paid $800 for July rent on office space. 3. Purchased equipment on account $3,000. 4. Performed legal services to clients for cash $1,500. 5. Borrowed $700 cash from a bank on a note payable. 6. Performed legal services for client on account $2,000. 7. Paid monthly expenses: salaries and wages $500, utilities $300, and advertising $100. 8. Joan withdrew $1,000 cash for personal use. Instructions (a) Prepare a tabular summary of the transactions. (b) Prepare the income statement, owner's equity statement, and balance sheet at July 31, 2017, for Joan Robinson, AttorneyExplanation / Answer
PART-1)
Assets
=
Liabilities
+
Capital
Details
Transaction
Cash
+
Accounts Receivable
+
Equipment
=
Accounts Payable
Notes Payable
Joan Robinson Capital
1
$11,000
$11,000
Investment
2
-$800
-$800
Rent Expense
$10,200
$10,200
3
$3,000
$3,000
$10,200
$3,000
=
$3,000
+
$10,200
4
$1,500
$1,500
Service revenue
$11,700
$3,000
$3,000
$11,700
5
$700
$700
$12,400
$3,000
$3,000
$700
$11,700
6
$2,000
$2,000
Service revenue
$12,400
$2,000
$3,000
$3,000
$700
$13,700
7
-$900
-$500
Salaries expense
-$300
Utilities expense
-$100
Telephone expense
$11,500
$2,000
$3,000
$3,000
$700
$12,800
8
-$1,000
-$1,000
Withdrawls
$10,500
$2,000
$3,000
$3,000
$700
$11,800
PART-2)
Income Statement
Revenues
Service Revenue
$3,500
Expenses
Rent expense
$800
Salaries expense
$500
Utilities expense
$300
Telephone expense
$100
Total expenses
$1700
Net Income
$1800
Owner's Equity Statement
Joan Robinson Capital July 1
Add: Investments
$11,000
Net Income
$1,800
Less: Withdrawls
$1000
Joan Robinson Capital July 31
$11,800
Balance Sheet
Assets
Cash
$ 10,500
Accounts receivable
$ 2,000
Equipment
$ 3,000
Total assets
$ 15,500
Liabilities and Owner's Equity
Liabilities
Accounts payable
$ 3,000
Notes payable
$ 700
Total Liabilities
$ 3,700
Owner's Equity
Joan Robinson, Capital
$ 11,800
Total Liabilities and Owner's Equity
$ 15,500
Assets
=
Liabilities
+
Capital
Details
Transaction
Cash
+
Accounts Receivable
+
Equipment
=
Accounts Payable
Notes Payable
Joan Robinson Capital
1
$11,000
$11,000
Investment
2
-$800
-$800
Rent Expense
$10,200
$10,200
3
$3,000
$3,000
$10,200
$3,000
=
$3,000
+
$10,200
4
$1,500
$1,500
Service revenue
$11,700
$3,000
$3,000
$11,700
5
$700
$700
$12,400
$3,000
$3,000
$700
$11,700
6
$2,000
$2,000
Service revenue
$12,400
$2,000
$3,000
$3,000
$700
$13,700
7
-$900
-$500
Salaries expense
-$300
Utilities expense
-$100
Telephone expense
$11,500
$2,000
$3,000
$3,000
$700
$12,800
8
-$1,000
-$1,000
Withdrawls
$10,500
$2,000
$3,000
$3,000
$700
$11,800
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