Question

Hart, Attorney at Law, experienced the following transactions in Year 1, the first year of operations:

1. Accepted $36,000 on April 1, Year 1, as a retainer for services to be performed evenly over the next 12 months.
2. Performed legal services for cash of $54,000.
3. Purchased $2,800 of office supplies on account.
4. Paid $2,400 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 $31,000.
7. Determined that at the end of the accounting period $200 of office supplies remained on hand.
8. On December 31, Year 1, 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 Statement of 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. 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. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed.)

Hart, Attorney at Law, experienced the following transactions In Year 1, the first year of operations: 1. Accepted $36,000 on April 1, Year 1, as a retainer for services to be performed evenly over the next 12 months. 2. Performed legal services for cash of $54,000. 3. Purchased $2,800 of office supplies on account. 4. Pald $2,400 of the amount due on accounts payable. 5. Pald a cash dividend to the stockholders of $5,000. 6. Pald cash for operating expenses of $31,000. 7. Determined that at the end of the accounting period $200 of office supplies remained on hand. 8. On December 31, Year 1, 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 Statement of 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. 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. Not all cells in the Statement of Cash Flows" column may require an Input - leave cells blank If there is no corresponding Input needed.) % Answer is not complete. Income Statement Expense = Transaction Assets Net Income Statement of Cash Flows + Supplies Cash 36.000 54.000 HART, ATTORNEY AT LAW Effect of Transactions on the Financial Statements for Year 1 Balance Sheet Liabilities Stockholders' Revenue Equity Accounts Unearned Retained Payable Revenue Earnings 36.000 54.000 54.000 2.800 (2.400) (5.000) (31,000) (2,800) (27.000) + 27.000 27.000 400 + 9.000 + 42.400 81.000 36,000 OA 54.000OA + 54.000 + (2,400) (5,000) (31,000) + (31,000) OA 31.000 2.600 = = (31,000) (2.600) 27,000 47.400 Totals 51.800 + 200 = 33.600 = 59.000

Answer 1

	Assets		Liabilities		Stockholders' Equity	Income Statement			Statement of cash flows
Event no.	Cash	Supplies	Accounts Payable	Unearned Revenue	Retained earnings	Revenue	Expense	Net income
1	$ 36,000			$                    36,000					$ 36,000	OA
2	$ 54,000				$                     54,000	$ 54,000		$     54,000	$ 54,000	OA
3		$ 2,800	$                  2,800						NA
4	$   -2,400		$                 -2,400						$   -2,400	OA
5	$   -5,000				$                      -5,000				$   -5,000	FA
6	$ -31,000				$                    -31,000		$ 31,000	$    -31,000	$ -31,000	OA
7		$ -2,600			$                      -2,600		$   2,600	$      -2,600	NA
8				$                  -27,000	$                     27,000	$ 27,000		$     27,000	NA
Totals	$ 51,600	$     200	$                     400	$                      9,000	$                     42,400	$ 81,000	$ 33,600	$     47,400	$ 51,600	NC