Question

Problem 2.4A (Static) Preparing an income statement, a statement of owner's equity, and a balance sheet. LO 2-4, 2-5 The following equation shows the transactions of Cotton Cleaning Service during May. The business is owned by Taylor Cotton + Assets Acets Rec + Supp. + Equip 3,000 + 5,800 + 33,800 Liab Accts. Pay 7,000 Owner's Equity T.Cotton, Capital + Rev. + 50,600 0 + Exp. 0 980 980 + Cash 15,000 -980 14,020 +4,980 19,000 -2,100 16.900 3,000 +5,800 + 33,800 7,000 + 50,600 0 +4,980 4.980 + 3,000 5,800 + 33,800 - + 50,600 980 7,000 -2,100 4,900 + + 33,800 = 980 Balances, May 1 Pald for utilities New balances Sold services for cash New balances Paid a creditor New balances Sold services on credit New balances Paid salaries New balances Paid telephone bill New balances Withdrew cash for personal expenses New balances 3,000 + 5,800 + 2.900 5,900 + 5,800 + 50,600+ 4.980 +2,900 + 50.000 7,880 + + 33,600 - 4,900 + 5,900 + 5,800 + 33,800 - 4,900 50,600 + 7,880 16,900 - 8,900 8,000 - 314 7,686 - 3,000 +8,900 9,880 - 314 - 10,194 + 5.900 5,800 33,800 4,900 + 50,600 + 7,880 3,000 + 47,600 4,686 5,900 + 5.800 +33,800 4,900 7,880 10,104 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, 20X1. Analyze: In order to complete the balance sheet, which amount was transferred from the statement of owner's equity?

Answer 1

4980 Cotton Cleaning Services Income Statement For the Month Ended 31st May, 20X1 Revenue Service Revenue - Cash Service Revenue - Credit Expenses Utilities Expenses 980 Salaries Expenses 8900 Telephone Bill 314 Cotton Cleaning Services Balance Sheet 31st May, 20x1 Liabilities 4686 Accounts Payable 5900 5800 Owner's Equity 33800 Owner's Equity at 31st Mat, 20X1 4900 Assets Cash Account Receivable Supplies Equipment 2900 45286 Total Assets 50186 Total Liabilities and Owner's Equity 50186 Total Expenses Net Income 10194 -2314 Analyze Amount Transferred from statement of Owner's Equity 45286 Cotton Cleaning Services Statement of Owner's Equity For the Month Ended 31st May, 20X1 Owner's Equity at 1st Mat, 20x1 Add: Investment During the Month 0 Net Income during Month -2314 50600 Note: Please comment down for any further clarifications. -2314 48286 Less : Withdrawls During the Month Owner's Equity at 31st Mat, 20x1 3000 45286