Applying the entity concept, using the accounting equation for transaction analysis, preparing financial statements, and evaluating business performance
Aimee Griffin practiced law 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 Aimee Griffin, Attorney. Griffin 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.
| 1-Dec | Sold personal investment in eBay stock, which she had owned for several years, receiving $33,000 cash. |
| 2 | Deposited the $33,000 cash from sales of the eBay stock in her personal bank account. |
| 3 | Received $159,000 cash from former law partners. |
| 5 | Deposited $109,000 cash in a new business bank account titled Aimee Griffin, Attorney. The business |
| gave capital to Griffin. | |
| 7 | Paid $900 cash for ink cartridges for the printer. |
| 9 | Purchased a computer for the law office, agreeing to pay the account, $9,200, within three months. |
| 23 | Finished court hearings on behalf of a client and submitted a bill for legal services, $17,000, on account. |
| 30 | Paid utilities, $1,900. |
| 31 | Griffin withdrew cash of $5,000. |
Requirements
1. Analyze the effects of the preceding events on the accounting equation of the propriertorship of Aimee Griffin, Attorney. Use a format similar to Exhibit 1-6.
2. At December 31, compute the business”s
a. total assets.
b. total liabilities.
c. total owner”s equity.
d. net income or net loss for the month.
3. Evaluate Aimee Griffin, Attorney”s first month of operations. Were the results good or bad?
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