Question

21. These items are taken from the financial statements of Sam Smith for 2018.

               Sam Smith, capital 1/1/18          $53,000

               Sam Smith Drawing                             5,000

            Selling expenses                                 10,000

            Equipment                                         65,000

              Accumulated depreciation (equip) 16,000

              Accounts payable                              5,300

            Cash                                                    16,900

               Inventory                                             3,500

            Salaries and wages payable            3,000

            Sales                                                     68,000

            Cost of merchandise sold             20,000

            Administrative expenses                  14,100

            Accounts receivable                        14,000

               Notes payable (due 12/31/20)         3,200

           

           

           

Instructions:

Prepare a multiple step income statement and a statement of owner’s equity for the year ended December 31, 2018 and a classified balance sheet as of December 31, 2018.

Sam Smith, CPA

Income Statement

For the period ending 12/31/18

Sam Smith, CPA

Statement of Owners Equity

For the period ending 12/31/18

                                                                    Sam Smith, CPA

                                                                    Balance Sheet

                                                                     As of 12/31/18

Assets	Liabilities
	Owner’s Equity
Total Assets	Total Liabilities & Owner’s Equity

Answer 1

Solution:

Multiple Income Statement
For the year ended 2017
Net Sales		$68,000
Less: Cost of Goods Sold		$20,000
Gross profit		$48,000
Less: Operating Expense
Selling Expenses	$10,000
Administrative Expense	$14,100
Total Operating Expense	$24,100	$24,100
Operating Income		$23,900

Statement of Owners Equity
Sams Capital 01/01/2018	$53,000
Add: Net Income	$23,900
	$76,900
Less: Drawings	$5,000
Sams Capital 31/12/2018	$71,900

Balance Sheet
Assets			Liabilities
Current Assets			Accounts Payable	5300
Cash		16900	Notes Payable	3200
Inventory		3500	Salaries and Wages Payable	3000
Accounts Receivable		14000	Total Current Liabilities	11500
Total Current Assets		34400	Owners Equity
Equipment	65000		Sams Capital	$71,900
Less: Accumulated Depreciation	16000	49000
Total Assets		$83400	Total Liabilities & Owners Equity	$83,400