Exercise 2-19A on page 111
Exercise 2-19A Supplies, unearned revenue, and the financial statements model
Hart, Attorney at Law, experienced the following transactions in 2016, the first year of
1. Accepted $36,000 on April 1, 2016, as a retainer for services to be performed evenly over the
next 12 months.
2. Performed legal services for cash of $54,000.
3. Purchased $2,800 of office supplies on account.
4. Paid $2,400 of the amount due on accounts payable.
5. Paid a cash dividend to the stockholders of $5,000.
6. Paid cash for operating expenses of $31,000.
7. Determined that at the end of the accounting period $200 of office supplies remained on
8. On December 31, 2016, recognized the revenue that had been earned for services performed
in accordance with Transaction 1.
Show the effects of the events on the financial statements using a horizontal statements model
like the following one. In the Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. Use NA
to indicate accounts not affected by the event. The first event has been recorded as an example.
Assets 5 Liabilities 1 Stk. Equity
No. Cash 1 Supplies 5 Accts. Pay 1 Unearn. Rev. 1 Ret. Earn. Rev. 2 Exp. 5 Net Inc. Cash Flow
1. 36,000 1 NA 5 NA 1 36,000 1 NA NA 2 NA 5 NA 36,000 OA
TABLE PROVIDED BELOW