FINANCIAL STATEMENTS Refer to the trial balance in Problem 3-13A and to the analysis of the change in owner’s equity in Problem 3-14A.Required1. Prepare an income statement for Kohl’s Home Repair for the month ended May 31, 20--.2. Prepare a statement of owner’s equity for Kohl’s Home Repair for the month ended May 31, 20--.3. Prepare a balance sheet for Kohl’s Home Repair as of May 31, 20--. P3-13 :T ACCOUNTS AND TRIAL BALANCE Wilhelm Kohl started a business in May 20-- called Kohl’s Home Repair. Kohl hired a part-time college student as an assistant. Kohl has decided to use the following accounts for recording transactions:AssetsCashAccounts ReceivableOffice SuppliesPrepaid InsuranceEquipmentVanLiabilitiesAccounts PayableOwner’s EquityWilhelm Kohl, CapitalWilhelm Kohl, DrawingRevenueService FeesExpensesRent ExpenseWages ExpensePhone ExpenseGas and Oil ExpenseThe following transactions occurred during May:(a) Invested cash in the business, $25,000.(b) Purchased a used van for cash, $6,000.(c) Purchased equipment on account, $4,000.(d) Received cash for services rendered, $7,500.(e) Paid cash on account owed from transaction (c), $2,300.(f) Paid rent for the month, $850.(g) Paid phone bill, $230.(h) Earned revenue on account, $4,500.(i) Purchased office supplies for cash, $160.(j) Paid wages to an assistant, $800.(k) Purchased a one-year insurance policy, $1,100.(l) Received cash from services performed in transaction (h), $3,400.(m) Paid cash for gas and oil expense on the van, $155.(n) Purchased additional equipment for $4,200, paying $1,500 cash and spreading the remaining payments over the next 10 months.(o) Earned service fees for the remainder of the month of $3,500: $1,900 in cash and $1,600 on account.(p) Withdrew cash at the end of the month, $2,900. Required1. Enter the transactions in T accounts, identifying each transaction with its corresponding letter.2. Foot and balance the accounts where necessary.3. Prepare a trial balance as of May 31, 20--. P3-14A: NET INCOME AND CHANGE IN OWNER’S EQUITY Refer to the trial balance of Kohl’s Home Repair in Problem 3-13A to determine the following information. Use the format provided below.1. a. Total revenue for the month _________b. Total expenses for the month _________c. Net income for the month _________2. a. Wilhelm Kohl’s original investment in the business _________1 Net income for the month _________2 Owner’s drawing _________Increase (decrease) in capital _________5 Ending owner’s equity _________b. End of month accounting equation:Assets = Liabilities + Owner’s Equity_________ = _________ + _________
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
FINANCIAL STATEMENTS Refer to the
Required
1. Prepare an income statement for Kohl’s Home Repair for the month ended May 31, 20--.
2. Prepare a statement of owner’s equity for Kohl’s Home Repair for the month ended May 31, 20--.
3. Prepare a balance sheet for Kohl’s Home Repair as of May 31, 20--.
P3-13 :T ACCOUNTS AND TRIAL BALANCE Wilhelm Kohl started a business in May 20-- called Kohl’s Home Repair. Kohl hired a part-time college student as an assistant. Kohl has decided to use the following accounts for recording transactions:
Assets
Cash
Accounts Receivable
Office Supplies
Prepaid Insurance
Equipment
Van
Liabilities
Accounts Payable
Owner’s Equity
Wilhelm Kohl, Capital
Wilhelm Kohl, Drawing
Revenue
Service Fees
Expenses
Rent Expense
Wages Expense
Phone Expense
Gas and Oil Expense
The following transactions occurred during May:
(a) Invested cash in the business, $25,000.
(b) Purchased a used van for cash, $6,000.
(c) Purchased equipment on account, $4,000.
(d) Received cash for services rendered, $7,500.
(e) Paid cash on account owed from transaction (c), $2,300.
(f) Paid rent for the month, $850.
(g) Paid phone bill, $230.
(h) Earned revenue on account, $4,500.
(i) Purchased office supplies for cash, $160.
(j) Paid wages to an assistant, $800.
(k) Purchased a one-year insurance policy, $1,100.
(l) Received cash from services performed in transaction (h), $3,400.
(m) Paid cash for gas and oil expense on the van, $155.
(n) Purchased additional equipment for $4,200, paying $1,500 cash and spreading the remaining payments over the next 10 months.
(o) Earned service fees for the remainder of the month of $3,500: $1,900 in cash and $1,600 on account.
(p) Withdrew cash at the end of the month, $2,900.
Required
1. Enter the transactions in T accounts, identifying each transaction with its corresponding letter.
2. Foot and balance the accounts where necessary.
3. Prepare a trial balance as of May 31, 20--.
P3-14A: NET INCOME AND CHANGE IN OWNER’S EQUITY Refer to the trial balance of Kohl’s Home Repair in Problem 3-13A to determine the following information. Use the format provided below.
1. a. Total revenue for the month _________
b. Total expenses for the month _________
c. Net income for the month _________
2. a. Wilhelm Kohl’s original investment in the business _________
1 Net income for the month _________
2 Owner’s drawing _________
Increase (decrease) in capital _________
5 Ending owner’s equity _________
b. End of month accounting equation:
Assets = Liabilities + Owner’s Equity
_________ = _________ + _________
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