Introduction
This report presents the accounting records of Attorney at Law, Jones for the month of
May 2024. It includes the general journal, general ledger, trial balance and financial
statement. The goal is to demonstrate the full accounting cycle, from recording
transactions to calculating the company’s net profit.
1. General Journal
The journal records all business transactions in chronological order.
May 1st:
Jones invested $2,000,000 to start his law firm. Cash increased and Owner’s Equity
increased.
May 5th:
Jones deposited $50,000 into the business bank account as an additional capital
contribution. Bank increased and Owner’s Equity increased.
May 6th:
Office supplies were purchased for $450 in cash. Office Supplies Expenses increased
and Cash decreased.
May 7th:
Jones purchased office furniture for $7,000 on credit, payable within six months.
Furniture increased and Accounts Payable increased.
May 11th:
Jones deposited $75,000 from personal funds, originating from the sale of shares, into
the business bank account as capital. Bank increased and Owner’s Equity increased.
May 12th:
Legal services were provided to clients, generating $4,000 in revenue on credit.
Accounts Receivable increased and Legal Services Revenue increased.
May 18th:
Utilities were paid in the amount of $570 from the business bank account. Utilities
Expenses increased and Bank decreased.
May 25th:
Jones paid $200 in wages to the receptionist from the business bank account. Wages
Expenses increased and Bank decreased.
May 29th:
Office rent of $1,000 was paid from the business bank account. Office Rent Expenses
increased and Bank decreased.
May 30th:
Jones withdrew $2,500 in cash from the business for personal use. Owner’s Equity
decreased and Cash decreased.
2. General Ledger
Cash:
On May 1st, cash increased by $2,000,000 due to Jones's capital investment.
On May 6th, cash decreased by $450 for the purchase of office supplies.
On May 30th, cash decreased by $2,500 due to a withdrawal made by Jones for
personal use.
The final balance in the cash account is $1,997,050.
Bank:
On May 5th, the bank account increased by $50,000 from a capital contribution.
On May 11th, the bank account increased by $75,000 from another capital
contribution.
On May 18th, it decreased by $570 for utilities expenses.
On May 25th, it decreased by $200 for wage expenses.
On May 29th, it decreased by $1,000 for office rent.
The final balance in the bank account is $123,230.
Owner’s Equity:
On May 1st, owner’s equity increased by $2,000,000 from Jones’s initial investment.
On May 5th, it increased by $50,000 from an additional capital contribution.
On May 11th, it increased by $75,000 from another capital contribution.
On May 30th, it decreased by $2,500 due to a withdrawal for personal use.
The final balance in owner’s equity is $2,122,500.
Office Supplies Expenses:
On May 6th, office supplies expenses increased by $450 for the purchase of
letterhead stationery.
The final balance in this account is $450.
Furniture:
On May 7th, the furniture account increased by $7,000 for the purchase of office
furniture on credit.
The final balance in this account is $7,000.
Accounts Payable:
On May 7th, accounts payable increased by $7,000 as the furniture was bought on
credit.
The final balance in this account is $7,000.
Accounts Receivable:
On May 12th, accounts receivable increased by $4,000 due to legal services
provided on credit.
The final balance in this account is $4,000.
Legal Services Revenue:
On May 12th, legal services revenue increased by $4,000 for services rendered.
The final balance in this account is $4,000.
Utilities Expenses:
On May 18th, utilities expenses increased by $570 due to payment of utility bills.
The final balance in this account is $570.
Wages Expenses:
On May 25th, wages expenses increased by $200 due to payment to the
receptionist.
The final balance in this account is $200.
Office Rent Expenses:
On May 29th, office rent expenses increased by $1,000 for the monthly office rent.
The final balance in this account is $1,000.
3. Trial Balance
Debit Balances:
* Cash: $1,997,050
* Bank: $123,230
* Office Supplies Expenses: $450
* Furniture: $7,000
* Accounts Receivable: $4,000
* Utilities Expenses: $570
* Wages Expenses: $200
* Office Rent Expenses: $1,000
Total Debits: $2,133,500
Credit Balances:
* Owner’s Equity: $2,122,500
* Accounts Payable: $7,000
* Legal Services Revenue: $4,000
Total Credits: $2,133,500.00
The total debits and credits are equal, which indicates that the ledger entries have been
properly recorded and balanced.
4. Financial Statement
Expenses
Office supplies $450.00
Utilities$570.00
Wages $200.00
Office Rent $1,000.00
Total Expenses $2,220.00
Revenues
Legal Services Revenue $4,000.00
Net Profit (Utility) $1,780.00
Conclusion
This report illustrates the steps of the accounting cycle: recording transactions in the
journal, posting to the ledger, moving them to the trial balance and preparing the
financial statement. The company earned a net profit of $1,780.00, showing a positive
financial performance for the period.
