AbbyAbby PrimrosePrimrose recently opened her own law office, which she operates
ID: 2492032 • Letter: A
Question
AbbyAbby
PrimrosePrimrose
recently opened her own law office, which she operates as a sole proprietorship. The name of the new entity is
AbbyAbby
PrimrosePrimrose,
Attorney.
PrimrosePrimrose
experienced the following events during the organizing phase of the new business and its first month of operation,
MarchMarch
20162016.
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.
Sold personal investment in Amazon stock, which she had owned for several years, receiving $ 31 comma 000$31,000 cash. 2 Deposited the $ 31 comma 000$31,000 cash from the sale of the Amazon stock in her personal bank account. 3 Deposited $ 60 comma 000$60,000 cash in a new business bank account titled AbbyAbby PrimrosePrimrose, Attorney. The business gave capital to PrimrosePrimrose. 5 Paid $ 500$500 cash for ink cartridges for the printer. 7 Purchased computer for the law office, agreeing to pay the account, $ 7 comma 500$7,500, within three months. 9 Received $ 3 comma 800$3,800 cash from customers for services rendered. 15 Received bill from The Lawyer for magazine subscription, $ 150$150. (Use Miscellaneous Expense account.) 23 Finished court hearings on behalf of a client and submitted a bill for legal services, $ 11 comma 000$11,000, on account. 28 Paid bill from The Lawyer. 30 Paid utilities, $ 1 comma 200$1,200. 3131 Received $ 3 comma 300$3,300 cash from clients billed on Mar.Mar. 23. 3131 PrimrosePrimrose withdrew cash of $ 3 comma 000$3,000.
Explanation / Answer
Answer
Sold personal investment in Amazon stock, which she had owned for several years, receiving $31,000 cash.
Personal Transaction (No Journal Entry)
2 Deposited the $31,000 cash from the sale of the Amazon stock in her personal bank account.
Personal Transaction (No Journal Entry)
3 Deposited $60,000 cash in a new business bank account titled Abby Primrose, Attorney. The business gave capital to Primrose.
Cash A/c Dr. $60,000
To Capital A/c Cr. $60,000
5 Paid $500 cash for ink cartridges for the printer.
Printer ink Cartridges Expenses A/c Dr. $ 500
To Cash A/c Cr. $ 500
7 Purchased computer for the law office, agreeing to pay the account $7,500, within three months.
Computer A/c Dr. $7,500
To Payables for computer A/c Cr. $7,500
9 Received $3,800 cash from customers for services rendered.
Cash A/c Dr. $3,800
To Service revenues A/c Cr. $3,800
15 Received bill from The Lawyer for magazinesubscription, $150. (Use Miscellaneous Expenseaccount.)
Miscellaneous expense A/c Dr. $150
To Expense payable A/c Cr. $150
23 Finished court hearings on behalf of a client and submitted a bill for legalservices, $11,000, on account.
Service Receivable A/c Dr. $11,000
To Service Revenue A/c Cr. $11,000
28 Paid bill from The Lawyer.
Expense payable A/c Dr. $150
To Cash A/c Cr. $150
30 Paidutilities,$1,200.
Utilities Expense A/c Dr. $1,200.
To Cash A/c Cr. $ 1,200
31 Received $3,300 cash from clients billed on Mar. 23.
Cash A/c Dr. $3,300
To Service Receivables A/c Cr. $3,300
31 Primrose withdrew cash of $3,000.
Capital A/c Dr. $ 3000
To Cash A/c Cr. $ 3,000