Preparing an income statement, a statement of owner’s equity, and a balance sheet.
The following equation shows the transactions of West Cleaning Service during May. The business is owned by Carol West.
|
|
| Assets |
|
| = | Liab. | + |
|
| Owner’s Equity | ||||
|
|
| Accts. |
|
|
|
|
| Accts. |
| C. West, |
|
|
|
|
| Cash | + | Rec. | + | Supp. | + | Equip. | = | Pay. | + | Capital | + | Rev. | − | Exp. |
Balances, May 1 | 14,000 | + | 2,000 | + | 4,800 | + | 32,800 | = | 6,000 | + | 47,600 | + | 0 | − | 0 |
Paid for utilities | −880 |
| ______ |
| ______ |
|
|
| ______ |
| ______ |
| ______ |
| +880 |
New balances | 13,120 | + | 2,000 | + | 4,800 | + | 32,800 | = | 6,000 | + | 47,600 | + | 0 | − | 880 |
Sold services for cash | +4,880 |
| ______ |
| ______ |
| ______ |
| ______ |
| ______ |
| +4,880 |
|
|
New balances | 18,000 | + | 2,000 | + | 4,800 | + | 32,800 | = | 6,000 | + | 47,600 | + | 4,880 | − | 880 |
Paid a creditor | −1,600 |
| ______ |
| ______ |
| ______ |
| −1,600 |
| ______ |
| ______ |
| ______ |
New balances | 16,400 | + | 2,000 | + | 4,800 | + | 32,800 | = | 4,400 | + | 47,600 | + | 4,880 | − | 880 |
Sold services on credit | ______ |
| +2,400 |
| ______ |
| ______ |
| ______ |
| ______ |
| +2,400 |
| ______ |
New balances | 16,400 | + | 4,400 | + | 4,800 | + | 32,800 | = | 4,400 | + | 47,600 | + | 7,280 | − | 880 |
Paid salaries | − 8,400 |
| ______ |
| ______ |
| ______ |
| ______ |
| ______ |
| ______ |
| + 8,400 |
New balances | 8,000 | + | 4,400 | + | 4,800 | + | 32,800 | = | 4,400 | + | 47,600 | + | 7,280 | − | 9,280 |
Paid telephone bill | − 304 |
| ______ |
| ______ |
| ______ |
| ______ |
| ______ |
| ______ |
| + 304 |
New balances | 7,696 | + | 4,400 | + | 4,800 | + | 32,800 | = | 4,400 | + | 47,600 | + | 7,280 | − | 9,584 |
Withdrew cash for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
personal expenses | −2,000 |
| ______ |
| ______ |
| ______ |
| ______ |
| −2,000 |
| ______ |
| ______ |
New balances | 5,696 | + | 4,400 | + | 4,800 | + | 32,800 | = | 4,400 | + | 45,600 | + | 7,280 | − | 9,584 |
INSTRUCTIONS
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, 2010. List the expenses in detail on the income statement.
Analyze: In order to complete the balance sheet, which amount was transferred from the statement of owner’s equity?
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