Demonstration Problem Joan Robinson opens her own law office on July, 1 2005. During the first month of operations, the following transactions occurred. 1. Invested $10,000 in cash in the law practice. 2. Paid $800 for July rent on office space. 3. Purchased office equipment on account $3,000. 4. Provided legal services to clients for cash $1,500. 5. Borrowed $700 cash from a bank on a note payable. 6. Performed legal services for a client on account $2,000. 7. Paid monthly expenses: salaries $500, utilities $300, and telephone $100. Instructions (a) Prepare a tabular summary of the transactions. (b) Prepare the income statement, owner's equity statement, and balance sheet at July 31 for Joan Robinson, Attorney at Law. SOLUTION TO DEMONSTRATION PROBLEM (a) Assets = Liabilities + Capital Transaction Cash + Accounts + Equipment = Accounts Notes Joan Robinson Receivable Payable Payable Capital (1) $10,000 $10,000 Investment (2) (800) (800) Rent Expense $9,200 $9,200 (3) $3,000 $3,000
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