Question

The accountant for the firm owned by Vincent Sutton prepares financial statements at the end of each month. Transactions: a. Sutton Invested $90,000 in cash to start the business. b. Paid $6,000 for the current month's rent. C. Bought office furniture for $10,580 in cash. d. Performed services for $8,200 in cash. e. Paid $1,250 for the monthly telephone bil f. Performed services for $14,000 on credit. g. Purchased a computer and copler for $18,000; paid $7,200 in cash Immediately with the balance due in 30 days. h. Received $7,000 from credit clients. 1. Paid $2,800 in cash for office cleaning services for the month. J. Purchased additional office chairs for $5,800; received credit terms of 30 days. k. Purchased office equipment for $22.000 and paid half of this amount in cash immediately, the balance is due in 30 days. I. Issued a check for $9.400 to pay salaries. m. Performed services for $14,500 in cash. n. Performed services for $16,000 on credit. o. Collected $8,000 on accounts receivable from charge customers. p. Issued a check for $2,900 in partial payment of the amount owed for office chairs. 4. Paid $725 to a duplicating company for photocopy work performed during the month. 1. Paid $1.280 for the monthly electric bill. s. Sutton withdrew $5,500 in cash for personal expenses. Required: Prepare a trial balance, an income statement, a statement of owner's equity, and a balance sheet. Assume that the transactions took place during the month ended June 30, 20XL Determine the account balances before you start work on the financial statements. Analyze: What is the change in owner's equity for the month of June? Complete this question by entering your answers in the tabs below. Trial Income Stmt of Balance Balance Statem... Owners Sheet Analyze Determine the account balances and prepare a trial balance for the month ended June 30, 20x1. VINCENT SUTTON, LANDSCAPE CONSULTANT Trial Balance June 30, 20X1 Account Name Debit Credit Total Trial Balance Income Statement >

Answer 1

Answer:

1.

VINCENT SUTTON LANDSCAPE CONSULTANT
Trial Balance
June 30, 20X1
Accounts Name	Debit	Credit
Cash	69,065
Office Furniture	16,380
Computer and Copier	18,000
Office Equipment	22,000
Drawings	5,500
Accounts Receivable	15,000
Accounts Payable		24,700
Owner's Capital		90,000
Revenue		52,700
Telephone Expenses	1,250
Miscellaneous Expenses	3,525
Electricity Expenses	1,280
Rent Expenses	6,000
Salaries Expenses	9,400
Total	$167,400	$167,400

2.

VINCENT SUTTON LANDSCAPE CONSULTANT
Income Statement
June 30, 20X1
Revenue
Fees Income		$52,700
Expenses:
Telephone Expenses	$1,250
Miscellaneous Expenses	$3,525
Electricity Expenses	$1,280
Rent Expense	$6,000
Salaries Expenses	$9,400
Total Expenses		$21,455
Net Income		$31,245

3.

VINCENT SUTTON LANDSCAPE CONSULTANT
Statement Of Owner's Equity
Vincent Sutton, Capital, June 1, 20X1		$90,000
Add: Net Income for June	$31,245
Less: Withdrawals for June	($5,500)
Increase in Capital		$25,745
Vincent Sutton, Capital, June 30, 20X1		$115,745

4.

VINCENT SUTTON LANDSCAPE CONSULTANT
Balance Sheet
June 30, 20X1
Assets		Liabilities:
Cash	$69,065	Accounts Payable	$24,700
Accounts Receivable	$15,000
Office Furniture	$16,380	Owner's Equity
Computer and Copier	$18,000	Owner's Capital	$115,745
Office Equipment	$22,000
Total Assets	$140,445	Total Liabilities and Owner's Equity	$140,445

5.

Change in owner's Equity

$25,745

Calculation:

Here we need to prepare a trial balance, an income statement, a statement of owner’s equity, and a balance sheet.

So first step is to determine the account balances. For that we need to take the transactions and do the adjustments.

a. Guttery invested $90,000 in cash to start the business. So the cash balance and the capital balance increases

b. Paid $6,000 for the current month’s rent. So the cash and the rent balance

c. Bought office furniture for $10,580 in cash. So the cash balance decreases and the office furniture increases.

d. Performed services for $8200 in cash. So the cash will come in as the revenue increases

e. Paid $1,250 for the monthly telephone bill. So the cash balance and the telephone bill expense

f. Performed services for $14,000 on credit. So the Accounts receivable increases so does revenue.

g. Purchased a computer and copier for $18,000; paid $7200 in cash immediately with the balance due in 30 days.So the computer and copier balance increases by 18000 and cash balance decreases by 7200.

Accounts payable = 18000 - 7200 = 10800

h. Received $7000 from credit clients. So the accounts receivable decreases and the cash balance increases

i. Paid $2800 in cash for office cleaning services for the month. So the cash balance decreases and miscellaneous expenses .

j. Purchased additional office chairs for $5800; received credit terms of 30 days. So the office chair increases and Also accounts payable

k. Purchased office equipment for $22,000 and paid half of this amount in cash immediately; the balance is due in 30 days. So the office equipment increases and the cash is half paid

Cash balance decreases by (22000 - 11000)= 11000 and also the accounts payable increases with same

l. Issued a check for $9400 to pay salaries. So the cash balance decreases and the salaries expenses

m. Performed services for $14500 in cash. So the revenue increases and also the cash balance

n. Performed services for $16000 on credit. So the account receivable and the revenue balance increases.

o. Collected $8000 on accounts receivable from charge customers. So here the cash is received so it increases and the accounts receivable decreases

p. Issued a check for $2,900 in partial payment of the amount owed for office chairs. So the cash is gone out of the firm and the accounts payable decreases

q. Paid $725 to a duplicating company for photocopy work performed during the month. So the cash is gone out of the firm and there is miscellaneous expenses

r. Paid $1,280 for the monthly electric bill. So the cash is gone out of the firm and the electric bill is paid

s. withdrew $5,500 in cash for personal expenses. So the cash balance is reduced and drawings account is increased

It is adjusted as below:

Please zoom in if the values in image is not visible

Telephon Miscellen Electricity Rent Cash Office Furniture Computer Office and Copier Equipment Drawings Accounts Receivables Accounts Payable Ovner's Capital Revenue e Jous Expenses Expenses Salaries Expenses Expenses Expenses a. 90,000 90,000 b. (6,000) c. (6,000) (10,580) 8,200 10,580 d. 8,200 (1.250) (1.250) f. 14,000 14,000 9. (7.200) 18,000 10,800 h. (7,000) 7,000 (2.800) i. (2.800) 5,800 5,800 11,000 Ik . 22,000 1. (11000) (9,400) 14,500 (9,400) m. 14,500 16,000 n. 16,000 (8,000) La 0. 8,000 (2.900) (2,900) P. 19 . (725) r. (1,280) (725) (1,280) (5.500) 69,065 S. 5,500 5.500 Total 16.380 18.000 22.000 15.000 24,700 90,000 52.700 (1.250) (3.525) (1.280) (6.000) (9.400)

Then we need to prepare the statements by taking the balances from the above prepared.

All these balances need to be taken to the Trial balance. Then we need to total it.

Then we need to make the income statement, for that we need to take the revenues and then deduct the Telephone Expenses, Miscellaneous Expenses, Electricity Expenses , Rent Expenses and then the Salaries Expenses to get the net income.

To prepare the balance sheet we need to take the assets such as cash, Accounts Receivable, Office Furniture, Computer and Copier and Office Equipment. Then in the liabilities side is Accounts payable. And then we need to take the Owner's Capital and then add it with the liabilities to get the Total Liabilities and Owner's Equity.

To get the change of owners equity for the month of June, we need to take the net income and then deduct the drawings made. Then we will get the increase in capital

Change in owner's Equity = 31,245 - $5,500 = 25,745