Revision Example 1

NOTE: This exercise revises recording transactions in a worksheet

format.

Date Transaction Details

30 Sep 2021 Received a capital payout of $100,000 from the partnership with
which she used to work. She decided that she needed to invest
$20, 000 in BHP shares as part of her personal share portfolio and
deposit the rest of the payout into a separate business bank
account.

01 Oct 2021 Entered into a rental agreement with the local business centre to
lease a two connecting rooms from which to run the law practice.
The rental is $1,200 per month in arrears. She paid a deposit
(bond) of $2,000.

Purchased the following office equipment (total $25,000), office

and waiting room furniture $15,000, a computer $6,000, and
second hand photocopier $4,000. Total was paid in cash.

02 Oct 2021 Employed a legal secretary to act as her assistant and receptionist.
Agreed on a fortnightly salary of $1,000, with the period of service
beginning on 7 October 20X1.

05 Oct 2021 Ordered stationery supplies, such as paper, disks and files to be
delivered on 7 October, and paid for by the October 31. Total cost
was $1,500.
Paid $300 cash for advertising to promote the business.

07 Oct 2021 Received ordered goods. Began seeing clients.

12 Oct 2021 Government steps up attempts to get all sole Legal Practitioners to
accept a $5,000 grant in return for agreeing to certain quality
assurance measures and undertaking a certain level of voluntary
legal aid. Jobeth sent a letter off for the information.

15 Oct 2021 Paid the telephone bill for $300 and the electricity bill of $100.

20 Oct 2021 Purchased birthday present for mother for $250

21 Oct 2021 Paid legal secretary’s salary
28 Oct 2021 Sent two cheques - one to Simpson’s Stationery Supplies to pay
off the full amount owing and one to the landlords (local business
centre).

31 Oct 2021 Her work performed for October was charged out as shown
below. The two columns represent those clients who paid cash
immediately and those who requested that their bills be put on
one week's credit.

Cash Credit Total

7 - 13 Oct $300 $1,450 $1,750
14 - 20 Oct $400 $1,500 $1,900
21 - 27 Oct $500 $700 $1,200
28 - 31 Oct $200 $400 $600
Total $1,400 $4,050 $5,450

31 Oct 2021 By the end of the month, Jobeth had received $1,000 from the
clients who had received credit.

Required:
 Using a worksheet, record the above transactions and prepare the financial
statements for Jobeth Marshall at October 31, 2021.
 Office waiting room furniture is depreciated using the straight-line method.
Estimated scrap value is $3,000 with a useful life of 4 years. The computer and
photocopier are depreciated using the reducing balance method at 15% p.a.
and 18% p.a. respectively.
 Advise Jobeth on the results of her first month of business.