Question

The following equation shows the transactions of Cotton Cleaning Service during May. The business is owned by Taylor Cotton. Assets = Liab. + Owner’s Equity Cash + Accts. Rec. + Supp. + Equip. = Accts. Pay. + T.Cotton, Capital + Rev. − Exp. Balances, May 1 16,000 + 4,000 + 6,800 + 34,800 = 8,000 + 53,600 + 0 − 0 Paid for utilities − 780 + 780 New balances 15,220 + 4,000 + 6,800 + 34,800 = 8,000 + 53,600 + 0 − 780 Sold services for cash + 4,780 + 4,780 New balances 20,000 + 4,000 + 6,800 + 34,800 = 8,000 + 53,600 + 4,780 − 780 Paid a creditor − 2,600 − 2,600 New balances 17,400 + 4,000 + 6,800 + 34,800 = 5,400 + 53,600 + 4,780 − 780 Sold services on credit + 3,400 + 3,400 New balances 17,400 + 7,400 + 6,800 + 34,800 = 5,400 + 53,600 + 8,180 − 780 Paid salaries − 9,400 + 9,400 New balances 8,000 + 7,400 + 6,800 + 34,800 = 5,400 + 53,600 + 8,180 − 10,180 Paid telephone bill − 324 + 324 New balances 7,676 + 7,400 + 6,800 + 34,800 = 5,400 + 53,600 + 8,180 − 10,504 Withdrew cash for personal expenses − 1,000 − 1,000 New balances 6,676 + 7,400 + 6,800 + 34,800 = 5,400 + 52,600 + 8,180 − 10,504 Required: Analyze each transaction carefully. Prepare an income statement and a statement of owner’s equity for the month. Prepare a balance sheet for May 31, 2019.

Answer 1

COTTON CLEANING SERVICE Income statement Mouth Ended may 31, 2019 Revenue fees income $ 8,180 Expenses Galasies expense $ 9,400 $ 324 Telephone expense Utilities expense $780 Less: Total expenses & lo,soy $2,324) Met Lom $ 53,600 COTTON CLEANING SERVICE Statement of owner's Equity a month Ended may 31, 2019 Taylor Cotton, Capital, May 1, 2019 Met loss for may $ 2,324 less: Withdrawal for may 1$ 1,000 Secrease in capital Taylor Cotton Capital, may 31, 2019 $3,324 $50,276

COTTON CLEANING SERVICE BALANCE SHEET May 31, 2019 Assets - liabilities cash $ 6,676 Accounts Payable $5,400 Accounts Receivable $7,900 Supplies $6,800 Owner's Equity Equipment $34,800 Taylor Cotton Capital $50, 276 Total Assets $55,676 Total liabidities and ownert $55,676 above in Note: Taylor Cotton, capital is calculated part (2) as owner's equity.