Question

Allen Shonton recently opened his own accounting firm on April 1, which he operates as a corporation. The name of the new entity is Allen Shonton, CPA. Shonton experienced the following events during the organizing phase of the new business and its first month of operations in 2018 Apr. 5 6 7 10 11 12 Shonton deposited $75,000 in a new business bank account titled Allen Shonton, CPA. The business issued common stock to Shonton. Paid $300 cash for letterhead stationery for new office. Purchased office furniture for the office on account, $9,500. Consulted with tax client and received $4,000 for services rendered Paid utilities, $190. Finished tax hearings on behalf of a client and submitted a bill for accounting services, $20,000. Paid office rent, 5750. Received amount due from client that was billed on April 12. Paid full amount of accounts payable created on April 7. Cash dividends of $3,500 were paid to stockholders 18 25 27 30 Requirements 1. Analyze the effects of the events on the accounting equation of Allen Shonton, CPA. Use a format similar to Exhibit 1-6. 2. Prepare the following financial statements: a. Income statement. b. Statement of retained earnings. c. Balance sheet.

Answer 1

		ASSETS	=	LIABILITIES	+	EQUITY
		Cash	+	Office Furniture	+		=	Account Payable	+	Share Capital	+	Income	-	Expenses	-	Dividends
Apr 5		$       75,000								$        75,000
Apr 6		$           -300												-300
Apr 7				$               9,500				$                9,500
Apr 10		$         4,000										$    4,000
Apr 11		$           -190												-190
Apr 12						$   20,000						$ 20,000
Apr 18		$           -750												-750
Apr 25		$       20,000				$ -20,000
Apr 27		$        -9,500						$               -9,500
Apr 30		$        -3,500														-3500
		$       84,760		$               9,500		$           -		$                       -		$        75,000		$ 24,000		$ -1,240		$ -3,500

Allen Shonton, CPA
Income Statement
For the month of April 2018
Revenue		$       24,000
Expenses
Stationery Expenses		$            300
Utilities Expense		$            190
Rent Expense		$            750
Total Expense		$         1,240
Net Income		$       22,760

Allen Shonton, CPA
Statement of Retained Earnings
For the month of April 2018
Net Income		$    22,760
Less: Dividends Paid		$     -3,500
Retained Earnings		$    19,260

Allen Shonton, CPA
Balance Sheet
Assets
Cash		$       84,760
Office Furniture		$         9,500
Total Assets		$       94,260
Liabilities
Accounts Payable		$                -
Equity
Share Capital		$       75,000
Retained Earnings		$       19,260
Total Equity		$       94,260