Question

in (0) PLAZA. On June 1, 2015, One Planet Cosmetics Corp. was formed. Its assets, liabilities, share capital, revenues, expenses. Prepare and dividends as at June 30 follow: stateme (SO4) Cash Accounts receivable Supplies Equipment Accounts payable Bank loan payable Common shares Dividends $ 6,000 4,000 1,400 32,000 2,300 14,000 25,000 1,000 Service revenue Supplies expense Interest expense Office expense Utilities expense Income tax expense Salaries expense $12,000 1,200 800 1,500 1,300 700 3,400 Instructions (a) Prepare an income statement, statement of changes in equity, and statement of financial position for the month. (b) Explain why it is necessary to prepare the financial statements in the order listed in (a).

Answer 1

	Income statement
	Service revenue		12000
	Expense
	Supplies expense	1200
	Interest expense	800
	Office expense	1500
	Utilities expense	1300
	Salaries expense	3400
	Total expense		8200
	Income before taxes		3800
	Income tax expense		700
	Net income		3100
	Statement of change in equity	Common stock	Retained earnings	Total
	Common stock added	25000		25000
	Net income		3100	3100
	Dividend		-1000	-1000
	Ending balance	25000	2100	27100
	Balance sheet
	Assets
	Cash	6000
	Accounts receivable	4000
	Supplies	1400
	Equipment	32000
	Total assets	43400
	Liabilities & stockholders equity
	Accounts payable	2300
	Bank loan payable	14000
	Common stock	25000
	Retained earnings	2100
	Total liabilities & stockholders equity	43400
b)
	Yes it is necessary because net income from income statement is used in change in equity statement
	Ending balance of equity statement is used in balance sheet statement