Question

X Х P1-5B The amounts of the assets and liabilities of Harada Office Cleaning as of December 31, 2020, and the revenues and expenses of the company for the year ended on December 31, 2020, appear below. The items are listed in alphabetical order. Accounts Payable $ 40,000 Land $100,000 50,000 Accounts Receivable 200,000 Note Payable Building 350,000 Property Tax Expense 10,000 30,000 Repairs Expense Cash 25,000 110,000 280,000 Salaries Expense Equipment 650,000 18,000 Service Revenue Furniture 10,000 14,000 Supplies Interest Expense 25,000 3,000 Utilities Expense Interest Payable (40) ENG 91

Answer 1

Answer :

Req. 1

Harada Office Cleaning
Income Statement
For the Year Ended December 31, 2020
Revenue:
Service revenue		$650,000
Expenses:
Salary expense	$280,000
Repairs expense	30,000
Utilities expense	25,000
Property tax expense	10,000
Interest expense	14,000
Total expenses		359,000
Net income		$291,000

Req. 2

Harada Office Cleaning
Statement of Owner's Equity
For the Year Ended December 31, 2020
Y. Harada, capital, January 1, 2020	$200,000
Add:    Net income for the year	291,000
	491,000
Less:    Withdrawals by owner	71,000
Y. Harada, capital, December 31, 2014	$420,000

Req. 3

Harada Office Cleaning
Balance Sheet
December 31, 2020
ASSETS		LIABILITIES
Cash	$ 25,000	Accounts payable	$ 40,000
Accounts receivable	50,000	Interest payable	3,000
Supplies	10,000	Notes payable	200,000
Equipment	110,000	Total liabilities	243,000
Building	350,000	OWNER'S EQUITY
Land	100,000	Y. Harada, capital	$420,000
Furniture	18,000	Total liabilities and
Total assets	$663,000	owner's equity	$663,000

Req. 4

(a)            Result of operations: Net income of $291,000, which is a profit.

(b)            Owner's equity increased during the year. This would make it easier to borrow money from a bank in the future.

(c)            At December 31:

              Total economic resources-total assets         $ 663,000

        -    Total amount owed-total liabilities             (243,000)

        =    Owner's equity                                              $ 420,000