Learning Objective : Construct and use a trial balance. Refer to Exercise.
1. After recording the transactions in Exercise, and assuming they all occurred in the month of November 2014, prepare the trial balance of Stephen Garner, Attorney, at November 30, 2014. Use the T-accounts that have been prepared for the business.
2. How well did the business perform during its first month? Compute net income (or net loss) for the month.
Exercise:-
Learning Objective : Analyze the impact of business transactions on accounts) Set up the following T-accounts: Cash, Accounts Receivable, Office Supplies, Office Furniture, Accounts Payable, Common Stock, Dividends, Service Revenue, Salary Expense, and Rent
Record the following transactions directly in the T-accounts without using a journal. Use the letters to identify the transactions.
a. Stephen Garner opened a law firm by investing $25,000 cash and office furniture with a fair value of $10,400. Organized as a professional corporation, the business issued common stock to Garner.
b. Paid monthly rent of $1,800.
c. Purchased office supplies on account, $1,050.
d. Paid employees' salaries of $3,600.
e. Paid $500 of the account payable created in transaction c.
f. Performed legal service on account, $10,000.
g. Declared and paid dividends of $3,200.