To show the effects of these transactions on the financial statements of Hart, Attorney at Law, include:
<u>Balance Sheet:</u>
Assets = Liabilities + Equity
Cash +$19,800 = Liabilities (Unearned Service Revenue) +$19,800
Cash +$68,000 = Liabilities + Equity (Service Revenue) +$68,000
Office Supplies +$1,100 = Liabilities (Accounts Payable) +$1,100 + Equity
Cash -$990 = Liabilities (Accounts Payable) -$990 + Equity
Cash -$6,000 = Liabilities + Equity (Dividend) -$6,000
Cash -$21,000 = Liabilities + Equity (Operating Expenses) -$21,000
Dec. 31 Year 1:
Office Supplies -$1,005 = Liabilities + Equity (Supplies Expenses) -$1,005
Assets = Liabilities (Unearned Service Revenue) -$14,850 + Equity (Service Revenue) +$14,850
<u>Income Statement:</u>
Service Revenue +$68,000
Operating Expenses -$21,000
Supplies Expenses -$1,005
Service Revenue +$14,850
<u>Cash Flows Statement:</u>
Unearned Service Revenue +$19,800 Operating cash inflow
Service Revenue +$68,000 Operating cash inflow
Accounts Payable -$990 Operating cash outflow
Dividend -$6,000 Financing cash outflow
Operating Expenses -$21,000 Operating cash outflow
Data Analysis:
April 1, Year 1:
Cash $19,800 Unearned Service Revenue $19,800
Cash $68,000 Service Revenue $68,000
Office Supplies $1,100 Accounts Payable $1,100
Accounts Payable $990 Cash $990
Dividend $6,000 Cash $6,000
Operating Expenses $21,000 Cash $21,000
Dec. 31 Year 1:
Supplies Expenses $1,005 Office Supplies $1,005 ($1,100 - $95)
Service Revenue $14,850 Unearned Service Revenue $14,850 ($19,800 x 9/12)
Thus, the relevant effects of the transactions in Year 1 are showed on the financial statements of Hart, Attorney at Law above.
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