Chapter 2, Problem 10SPA

### College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Chapter
Section

### College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

# EFFECT OF TRANSACTIONS ON ACCOUNTING EQUATION Jay Pembroke started a business. During the first month (April 20--), the following transactions occurred.(a) Invested cash in business, \$18,000.(b) Bought office supplies for \$4,600: \$2,000 in cash and \$2,600 on account.(c) Paid one-year insurance premium, \$1,200.(d) Earned revenues totaling \$3,300: \$1,300 in cash and \$2,000 on account.(e) Paid cash on account to the company that supplied the office supplies in transaction (b), \$2,300.(f) Paid office rent for the month, \$750.(g) Withdrew cash for personal use, \$100.REQUIREDShow the effect of each transaction on the individual accounts of the expanded accounting equation: Assets = Liabilities + Owner’s Equity (Capital − Drawing + Revenues − Expenses). After transaction (g), report the totals for each element. Demonstrate that the accounting equation has remained in balance.INCOME STATEMENT Based on Problem 2-9A, prepare an income statement for Jay Pembroke for the month of April 20--.

To determine

Prepare an income statement for the month of April.

Explanation

Income statement: Income statement is the financial statement of a company which shows all the revenues earned and expenses incurred by the company over a period of time.

Prepare an income statement:

 Company JP Income Statement For the month of April Particulars Amount Revenues \$3,300 Expenses:

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