Transaction Analysis
The following transactions are given:
a. A law firm was formed by 10 lawyers, each investing $200,000.
b. The firm charged its clients $1,200,000 for services rendered in May. Integration
c. The law firm collected $900,000 from its clients.
d. One disgruntled client sued the law firm for malfeasance in the amount of $5,000,000. The firm believes the lawsuit is frivolous.
e. The law firm paid its lawyers $333,000 for work performed in May.
f. The law firm ordered and received supplies costing $33,000 on account.
However, 10% of the order was damaged, so the firm returned the damaged supplies for credit.
g. The law firm paid $155,000 for rent and other administrative costs.
h. The law firm settled the suit by paying the disgruntled client $10,000.
Required:
Analyze the transactions, using the balance sheet equation, and prepare a simple balance sheet:
ASSETS =LIABILITIES + OWNERS’ EQUITY