question archive Assignment Details Assignment Description From the following information, please prepare an Income Statement, Statement of Owner's Equity, and Balance Sheet for the month of May of the current year
Assignment Details Assignment Description From the following information, please prepare an Income Statement, Statement of Owner's Equity, and Balance Sheet for the month of May of the current year
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Assignment Details Assignment Description From the following information, please prepare an Income Statement, Statement of Owner's Equity, and Balance Sheet for the month of May of the current year. Cash $12,000 Accounts Receivable 16,000 Supplies 350 Equipment 16,500 Notes Payable $13,000 Accounts Payable 12,000 S. Jones, Capital 18,000 S. Jones, Drawing 550 Service Revenue 6,000 Telephone Expense 350 Rent Expense 1,100 Advertising Expense 2,150 $49,000 $49,000
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Here are the financial statements as required:
| Income Statement | ||
|---|---|---|
| For the month ended May 31, XXXX | ||
| Service Revenue | $ 6,000 | |
| Less: Operating Expenses | ||
| Telephone Expense | $ 350 | |
| Rent Expense | 1,100 | |
| Advertising Expense | 2,150 | |
| Total Operating Expenses | 3,600 | |
| Net Income | $ 2,400 |
| Statement of Owner's Equity | |
|---|---|
| For the month ended May 31, XXXX | |
| S. Jones, Capital - beginning | $ 18,000 |
| Add: Net Income | 2,400 |
| Subtotal | 20,400 |
| Less: S. Jones, Drawings | 550 |
| S. Jones, Capital - ending | $ 19,850 |
| Balance Sheet | |
|---|---|
| May 31, XXXX | |
| ASSETS | |
| Current Assets | |
| Cash | $ 12,000 |
| Accounts Receivable | 16,000 |
| Supplies | 350 |
| Total Current Assets | 28,350 |
| Noncurrent Assets | |
| Equipment | 16,500 |
| TOTAL ASSETS | $ 44,850 |
| LIABILITIES AND OWNER'S EQUITY | |
| Current Liabilities | |
| Accounts Payable | 12,000 |
| Notes Payable | 13,000 |
| Total Liabilities | 25,000 |
| Owner's Equity | |
| S. Jones, Capital - ending | 19,850 |
| TOTAL LIABILITIES AND OWNER'S EQUITY | $ 44,850 |
Step-by-step explanation
Please read the following important points:
- We shall prepare first the income statement to determine the net income. All nominal accounts such as revenues and expenses are part of the income statement.
- After determining the net income, we will prepare the owner's equity statement to determine the ending balance of the capital account. The accounts reported in this financial statement are equity-related accounts. This includes beginning capital balance, additional investment, if any, drawings, and the net income for the period.
- After determining the ending capital balance, we need to forward this amount to the balance sheet under the Owner's Equity section. Both debit and credit sides must be the same to call it the balance sheet.
- Take note that you can replace the XXXX with the actual year if there is any. However, you omit this part if this is applicable to your case.
- In this case, the notes payable is treated as a current liability since there is no expressed statement to present it as a noncurrent liability.
