Question

The following financial statements were prepared at the end of the month of May:

TOPS IN TOPIARY - INCOME STATEMENT FOR the month of May

Revenue		$2,540
Expenses:
Rent Expense	$500
Advertising Expense	$500
Wages Expense	$200	$1,200
Net Income		$1,340

TOPS IN TOPIARY - STATEMENT OF OWNER'S EQUITY FOR the month of MAY

Owner's Equity at May 1	$0
plus: Investment	2,000
plus: Net Income	1,340
less: Withdrawals	0
Owner's Equity at May 31	$3,340

TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31

ASSETS		LIABILITES AND OWNER'S EQUITY
Current Assets:	Current Liabilities:
Cash	$1,380	Accounts Payable	$300
Accounts Receivable	$1,500	Advertising Payable	$500
Prepaid Rent	$ 500	Advances from Customers	$200
Prepaid Advertising	$ 500
Supplies	$ 100		$3,980
Equipment	$ 360	Owner's Equity	$3,340
Total Assets	$4,340	Total Liabilities & OE	$4,340

During June the following transactions occurred:

1) Completed a job for which the customer paid $500 in June. The invoice is for $1000.

2) Hire a helper and paid $1,000 for works done.

3) Paid $500 for the rent of July.

4) Purchased supplies for $500. At the end of June notices that there are $500 of supplies left.

5) Orders new flyers for advertising. They will be ready in July but the printer asked to be paid in advance $100.

6) In June collected in cash $1,000 for 3 jobs are done for a total of $4,500, the rest is owed in account by the customers.

7) In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years.

8) Received an advancement of $2,000 from a customer for a job to be done in August.

9) Asked for a 5 years loan in the local bank for $4,000 and got it in June 7th.

10) with the money of the loan purchased equipment for $4,200 It is expected that the equipment will last 5 years.

Prepare "T" Accounts in CASH Basis for the period ended on June 30th and then answer the questions.

At the end of the accounting period (June 30th, T account after AJE), what is the total of Owners Equity?

Between $1,000 and $1,499

Between $1,500 and $1,999

More than $3,000

Between $2,000 and $3,000

Less than $1,000

Answer 1

Solution as per Below Images:
Particulars Opening Balance To Accounts Receivables To Accounts Receivables To Advance From Customers To Bank Loan T Accounts Cash Account Dr Amount in $ Particulars 1380 By Wages 500 By Prepaid Rent 1000 By Supplies on Hand 2000 By Prepaid advertising 4000 By Closing Balance Cr Amount in $ 1000 500 500 100 6780 8880 8880 Particulars To Revenue To Revenue Accounts Receivable Account Dr Amount in $ Particulars 1000 By Cash 4500 By Cash By Closing Balance 5500 Cr Amount in $ 500 1000 4000 5500 5500 Particulars To Income Statement Dr Amount in $ 5500 Revenue Particulars By Accounts Receivables By Accounts Receivables Cr Amount in $ 1000 4500 5500 5500 Particulars Dr Amount in $ 1000 Wages Particulars By Income Statement Cr Amount in $ 1000 To Cash 1000 1000 | Particulars To Prepaid Rent (Prepaid Rent for June) Dr Amount in $ 500 Rent I Particulars By Income Statement Cr Amount in $ 500 500 500 | Particulars Opening Balance To Cash Cr Amount in $ 500 PrePaid Rent Dr Amount in $ Particulars 500 By Rent 500 ( Rent for June Reversed) BY Closing Balance 1000 500 1000 | Particulars Opening Balance To Cash Supplies on Hand Dr Amount in $ Particulars 100 By Supplies Expenses 500 BY Closing Balance Cr Amount in $ 100 500 600 600

Particulars To Supplies on Hand Supplies Expenses Dr Amount in $ Particulars 100 By Income Statement Cr Amount in $ 500 100 500 Particulars Opening Balance To Cash PrePaid Advertising Dr Amount in $ Particulars 500 BY Closing Balance 100 Cr Amount in $ 600 600 600 Particulars To Equipment To Equipment(New) Depreciation Dr Amount in $ Particulars 120 BY Income Statement 840 960 Cr Amount in $ 840 840 | Particulars Opening Balance To Cash Dr Amount in $ 360 4200 Equipment Particulars BY Depreciation By Depreciation (New Equipment) By Closing Balance Cr Amount in $ 120 840 3600 4560 4560 Particulars Closing Balance Advance From customers Dr Amount in $ Particulars 2200 Opening Balance By Cash 2200 Cr Amount in $ 200 2000 2200 Bank Loan Particulars Particulars Closing Balance Dr Amount in $ 4000 Cr Amount in $ 4000 By Cash 4000 4000

Income Statement Amount in $ Amount in $ 5500 Particulars Revenue Expenses: Supplies Expenses Wages Rent Depreciation Net Income 100 1000 500 840 2440 3060 Statement of Owners Equity For the month of June Particulars Balance on June 1 Add: Net Income Less: Withdrawals Balance on June 30 Amount in $ 3340 3060 6400 Hence Total of Owners Equity as on June 30th is More than $3000