Question

wenging live Problem 3 (45 points) An analysis of the transactions made by Dewey, Cheatem & Co., a law firm, for the month of July is shown below. Each increase and decrease in owner's equity is explained. Cash + Accounts Receivable Supplies - Equipment = Accounts Payable + Owner's Capital +$15,000 Investment +$6,000 +$3,500 +$750 +$7,600 + 10,000 Service Revenue 1. 2. 3. 4. 5. 6. 7. 8 9. 10. +$ 15,000 . 2,500 - 750 + 2,400 - 1,500 . 2,300 - 750 + 850 - 4,500 1,500 • - 2,300 Drawings 750 Rent Expense - 850 + - 4,500 Salaries Expense 400 - 400 Utilities Expense Instructions (a) Prepare an income statement for the month ending July 31, 2016. (b) Prepare an owner's equity statement for the month ending July 31, 2016. (c) Prepare a balance sheet at July 31, 2016.

Answer 1

10,000 Dewey, Cheatem & Co. Income Statement For the month ended July 31, 2016 Sales revenue Less: Operating Expense: Rent expense 750 Salaries expense 4,500 Utilities expense 400 Total operating expenses Net Income 5,650 4,350 Dewey, Cheatem & Co. Statement of owner's Equity For the month ended July 31, 2016 Owner's Capital, July 1 Add: Net income $15,000 $4,350 $19,350 $2.300 $17,050 Less: Drawing Owner's Capital, July 31 $5,950 $6,750 $750 $13,450 Dewey, Cheatem & Co. Balance Sheet As on July 31, 2016 Assets Current Assets Cash Accounts Receivable Supplies Total Current Assets Property Plant and Equipment Equipment Total Assets Liabilities and owner's Equity Current liabilities Accounts Payable Total Current liabilities Owners' equity owner's, capital Total owner's equity Total Liabilities & owner's Equity $6,000 $19,450 $2,4001 $2,400 $17,050 $17,0501 $19,450