Question

An analysis of the transactions made by Sandhill & Co., a certified public accounting firm, for the month of August is shown below. The expenses were $550 for rent, $4,300 for salaries and wages, and $500 for utilities.

		Cash	+	Accounts Receivable	+	Supplies	+	Equipment	=	Accounts Payable	+	Owner’s Capital	–	Owner’s Drawings	+	Revenues	–	Expenses
1.		$14,600										$14,600
2.		–2,900						$5,000		$2,100
3.		–850				$850
4.		5,400		$3,000												$8,400
5.		–1,600								–1,600
6.		–1,400												–$1,400
7.		–550																–$550
8.		500		–500
9.		–4,300																–4,300
10.										500								–500

Assume that August is the company’s first month of business.

Prepare an income statement for August 31, 2020. SANDHILL & CO. Income Statement $ $ $

Answer 1

$8,400 SANDHILL & CO. Income Statement For The Month Ended August 31, 2020 Revenue Sales Revenue Less: Expenses Salaries expense $4,300 Rent expense $550 Utilities $500 Total expenses Net Income $5,350 $3,050 SANDHILL & CO. Owners' Equity Statement For The Month Ended August 31, 2020 Opening balance, Owners' Capital Add: Capital introduced $14,600 Add: Net Income during the year $3,050 $0 Less: Drawings Closing balance, Owners' Capital $17,650 $17,650 $1,400 $16,250 SANDHILL & CO. Balance Sheet As on August 31, 2020 Assets Cash Accounts Receivable Supplies Equipment Total Assets Liabilities and Owners' Equity Liabilities: Accounts payable Owners' Equity: Owners' Capital Total Liabilities and Owners' Equity $8,900 $2,500 $850 $5,000 $17,250 $1,000 $16,250 $17,250