Reference no: EM132748238

Problem - Cecil Jameson, Attorney-at-Law, is organized as a corporation and operated by Cecil Jameson. On July 1, 20Y4, the company has the following assets, liabilities, and common stock: cash, $1,000; accounts receivable, $3,200; supplies, $850; land, $10,000; accounts payable, $1,530; common stock, $10,000. Office space and office equipment are currently being rented, pending the construction of an office complex on land purchased last year. Business transactions during July are summarized as follows:

a. Received cash from clients for services, $3,928.

b. Paid creditors on account, $1,055.

c. Received cash from Cecil Jameson as an additional investment in exchange for common stock, $3,700.

d. Paid office rent for the month, $1,200.

e. Charged clients for legal services on account, $2,025.

f. Purchased supplies on account, $245.

g. Received cash from clients on account, $3,000.

h. Received invoice for paralegal services from Legal Aid Inc. for July (to be paid on August 10), $1,635.

i. Paid the following: wages expense, $850; utilities expense, $325; answering service expense, $250; and miscellaneous expense, $75.

j. Determined that the cost of supplies on hand was $980; therefore, the cost of supplies used during the month was $115.

k. Paid dividends, $1,000.

Instructions -

1. Determine the amount of retained earnings as of July 1, 20Y4.

2. State the assets, liabilities, and stockholders' equity as of July 1 in equation form similar to that shown in this chapter. In tabular form below the equation, indicate the increases and decreases resulting from each transaction and the new balances after each transaction.

3. Prepare an income statement for July, a statement of stockholders' equity for July, and a balance sheet as of July 31, 20Y4.

4. Prepare a statement of cash flows for July.