Question

Alan Shelton recently opened his own accounting firm on April 1, which he operates as a corporation. The name of the new entity is Alan Shelton, CPA. Shelton experienced the following events during the organizing phase of the new business and its first month of operations in 2018: A (Click the icon to view the transactions.) Read the requirements. Requirement 1. Analyze the effects of the events on the accounting equation of Alan Shelton, CPA. Analyze the events chronologically, one transaction at a time, beginning with the transaction on the 5th. For each transaction that follows the transaction on the 5th, calculate the balance in each account after analyzing its effect on the accounting equation. After calculating the ending balance of each account on the 30th, calculate total assets and total liabilities and equity. (Complete only the necessary answer boxes for your transaction lines. [Do not enter any zeros for your transaction lines.] Carry down all balances to the "Bal." line, including zero balance accounts, entering a "0" for any zero balances. Enter a decrease in an account with minus sign or parentheses. Abbreviations used: A/P = Accounts Payable; A/R = Accounts Receivable: Com. = Common; Contr. = Contributed; Div. = Dividends; Exp. = Expense; Furn. = Furniture; Liab = Liabilities; Rev. = Revenue; Sup. = Supplies; Util. = Utilities.) EQUITY ASSETS LIAB. Contr. More Info Retained Earnings Cap. Furn. + Service - Rent Cash A/R Office A/P Com Div. Util. Sup. Stock Rev. Exp. Exp. 2000 100 Apr. 5 Shelton deposited $60,000 in a new business bank account titled 400 + 4500 + 12300 0 + 60000 58300 7000 4/5 Alan Shelton, CPA. The business issued common stock to Shelton. 6 Paid $400 cash for letterhead stationery for new office. 7 Purchased office furniture 10 Consulted with tax client and received $2,300 for services rendered. 11 Paid utilities, $100. the office on account, $7,000. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, $10,000. 18 Paid office rent, $2,000. Requirements 25 Received amount due from client that was billed on April 12. 27 Paid full amount of accounts payable created on April 7. 1. Analyze the effects of the events on the accounting equation of Alan Shelton, 30 Cash dividends of $4,500 were paid to stockholders. CPA. 2. Prepare the following financial statements: a. Income statement. b. Statement of retained earnings. c. Balance sheet. Print Done Print Done

Answer 1

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Alan Shelton										Equity
Answer 1	Assets	=	Liabilities	Contributed Capital		Retained Earnings
Date	Cash	+	A/R	+	Office	+	Furniture	=	A/P	Com. Stock.	-	Div	+	Service Rev.	-	Rent Exp.	-	Util Exp.
5-Apr	60,000.00	+		+		+		=		60,000.00	-		+		-		-
6-Apr	(400.00)	+		+		+		=			-		+		-		-	400.00
7-Apr		+		+		+	7,000.00	=	7,000.00		-		+		-		-
10-Apr	2,300.00	+		+		+		=			-		+	2,300.00	-		-
11-Apr	(100.00)	+		+		+		=			-		+		-		-	100.00
12-Apr		+	10,000.00	+		+		=			-		+	10,000.00	-		-
18-Apr	(2,000.00)	+		+		+		=			-		+		-	2,000.00	-
25-Apr	10,000.00	+	(10,000.00)	+		+		=			-		+		-		-
27-Apr	(7,000.00)	+		+		+		=	(7,000.00)		-		+		-		-
30-Apr	(4,500.00)	+		+		+		=			-	4,500.00	+		-		-
	$ 58,300.00	+	$              -	+	$          -	+	$ 7,000.00	=	$              -	$ 60,000.00		$ 4,500.00		$ 12,300.00		$ 2,000.00		$ 500.00

Answer 2 a
Income Statement	Amount $
Service Revenue	12,300.00
Total Revenue	12,300.00
Less: Expenses
Rent Expense	2,000.00
Utilities Expense	500.00
Total Expenses	2,500.00
Net Income	9,800.00
Answer 2 b
Statement of Retained Earnings	Amount $
Opening Retained Earnings	-
Add: Net Income	9,800.00
Less: Dividends	4,500.00
Closing Retained Earnings	5,300.00
Answer 2 c
Balance Sheet
Assets	Amount $
Cash	58,300.00
Furniture	7,000.00
Total Assets	65,300.00
Liabilities
Total Liabilities	-
Stockholder's Equity
Common Stock	60,000.00
Retained Earnings	5,300.00
Total Stockholder's Equity	65,300.00
Total Liabilities & Stockholder's Equity	65,300.00