(L. OBJ. 6, 7, 8, 9, 10) Applying the entity concept, using the accounting equation for...

(L. OBJ. 6, 7, 8, 9, 10) Applying the entity concept, using the accounting equation for transaction analysis, preparing financial statements, and evaluating business performance [20—30 min]

Arlene Lavoie practiced aw with a partnership for 10 years. Recently she opened her own law office, which she operates as a proprietorship. The name of the new entity is Arlene Lavoie, Attorney. Lavoie experienced the following events during the organizing phase of the new business and its first month of operation. Some of the events were personal and did not affect the law practice. Others were business transactions and should be accounted for by the business.

Requirements

1. Analyze the effects of the preceding events on the accounting equation of the corporation of Arlene Lavoie, Attorney. Use a format similar to Exhibit 1-8.

2. At May 31, compute the business’s

a. Total assets

b. Total liabilities

c. Total owner’s equity

di. Net income or net loss for the month

3. Evaluate Arlene Lavoie’s first month of operations. Were the results good or bad?