Final answer:
The transaction where McMunn Legal Services received $25,000 and provided $75,000 worth of services increases both assets (cash and accounts receivable) and equity (service revenue) by $75,000 in total, keeping the balance sheet equation in balance.
Step-by-step explanation:
The effect on the Statement of Financial Position equation for McMunn Legal Services upon receiving $25,000 cash from clients, with services performed totaling $75,000 and the balance to be received within 30 days, would result in an increase in both assets and equity. Specifically, the company's cash (an asset) increases by $25,000, and its accounts receivable (another asset) increases by $50,000, representing the remaining balance owed. On the other side of the equation, the service revenue earned (equity) increases by the full value of the services performed, which is $75,000. Therefore, the equation reflects an increase in assets ($25,000 in cash + $50,000 in accounts receivable) and an equal increase in equity (service revenue of $75,000), maintaining the balance of the equation.