Chapter 1, Problem 8BPSB

To determine

Concept Introduction:

Financial Statements: Financial statements are reports of the financial condition of a company or entity. In the financial statements, the management presents the financial performance and position of the company at a point in time. Financial statements disclose the financial effects of business transactions. Financial statements include a balance sheet, income statement, statement of cash flows and statement of change in equity.

Balance Sheet: The balance sheet provides details of the firm’s assets, liabilities and owner’s equity for a given date. The balance sheet gives a snapshot of what the company owns and owes as well as the amount invested in equity. The Balance sheet follows the below rule

$Assets=Liabilities+Equity$

Income Statement: It is also called the profit & loss statement. Income statement provides a snapshot of revenue, expenses and net income of the organization for a given period.

Statement of Cash Flows: It is a financial statement that shows the movements of cash and bank balance during a period. It describes the amount of cash generated by a company during a period and the use of the cash.

Statement of change in equity: It is a financial statement that shows the movements of the equity capital during a period.

1.

To prepare: A table in the required format for the given data

Explanation of Solution

The required table for the given data is prepared as below

	Assets										Liabilities	+	Equity
	Cash	+	Accounts Receivable	+	Office Supplies	+	Office equipment	+	Office suit	=	Account Payable	+	N. Nadal Capital	-	N. Nadal withdrawals	+	Revenues	-	Expenses
a	$90,000						10,000						100,000
b	-50,000								50,000
c	-25000						25,000
d					1,200		1,700				2,900
e	-750																		-750
f			2,800														2,800
g	4,000																4,000
h	-11,500														-11,500
i	1,800		-1,800
j	-700										-700
k	-2,500																		-2,500
	5,350	+	1,000	+	1,200	+	36,700	+	50,000	=	2,200	+	100,000	-	-11,500	+	6,800	-	-3,250

2.

To determine

The net income statement of the company.

Explanation of Solution

The net income is determined as below

Nadal Computing
Income Statement
	Details		Amount in $
	Revenue
	Income from services		$6,800
	Expenses
	Administrative expenses	750
	Salary expenses	2,500	3,.250
	Net income		$3,350