Accounting Cycle Project
You have been engaged to perform accounting services for Herman and Sons’ Law Offices. Your responsibilities include maintaining all accounting records and preparing annual financial statements. Herman and Sons’ opened on January 1, 2015. During the year, the firm had the following transactions:
1. January 2: The owners invested $200,000 into the business and acquired 25,000 shares of capital stock in return. 2. January 15: Herman and Sons’ took out a note for $80,000 from the bank to finance the purchase of an office building. 3. January 15: Herman and Sons’ bought an office building in the amount of $80,000. 4. February 12: Herman and Sons’ billed clients for $90,000 of services performed. 5. March 1: Herman and Sons’ took out a two-year insurance policy, which it paid cash for in the amount of $18,000. 6. March 10: Herman collected $12,000 from clients toward the outstanding accounts receivable balance. 7. May 13: Herman received cash payments totaling $185,000 for legal services—$30,000 was for services previously billed to customers on February 12 and the remainder was for services provided in May not yet recorded. 8. June 10: Herman purchased office supplies in the amount of $15,000, all of which it paid on credit account with the supplier. 9. July 15: Herman paid wages of $42,000 in cash to office staff workers. 10. August 8: Herman paid the $10,000 owed to a supplier for the purchase made on June 10. 11. September 3: Herman and Sons’ purchased $17,000 of office supplies in cash. 12. September 20: The company paid $9,000 cash for utilities. 13. October 1: Herman and Sons’ paid wages in the amount of $32,000 to office workers. 14. December 1: Herman and Sons’ received cash payments from clients in the amount of $320,000 for services to be performed in the upcoming months. 15. December 31: Herman declared and paid a $7,000 dividend.
Your first step is to analyze each transaction during Herman and...
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