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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

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

FINANCIAL STATEMENTS From the following trial balance taken after one month of operation, prepare an income statement, a statement of owner’s equity, and a balance sheet.

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To determine

Prepare an income statement, a statement of owner’s equity, and a balance sheet for the Company TJ.

Explanation

Income statement:

The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Statement of Owners’ equity:

This statement reports the beginning stockholder's equity and all the changes which led to ending stockholder's equity. Additional capital, net income from income statement is added to and drawings or dividends are deducted from beginning stockholder's equity to arrive at the end result, closing balance of stockholder's equity.

Balance sheet:

This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.

Prepare an income statement for the Company TJ.

Company TJ
Income statement
For the month ended July 31, 20..
AccountsDebit ($)Credit ($)
Revenue:  
Painting fees 3,600
Expenses:  
Wages expense900 
Rent expense 250 
Phone expense50 
Transportation expense60 
Utilities expense70 
Miscellaneous expense251,355
Net income  2,245

(Table 1)

Therefore, the income statement for the month ended July 31 is 2,245.

Prepare a statement of owner’s equity for the Company TJ...

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