From the following information, please prepare an Income Statement, Statement of Owner’s Equity, and Balance Sheet for the month of May of the current year.
Cash
$12,000
Accounts Receivable
16,000
Supplies
350
Equipment
16,500
Notes Payable
$13,000
Accounts Payable
12,000
S. Jones, Capital
18,000
S. Jones, Drawing
550
Service Revenue
6,000
Telephone Expense
350
Rent Expense
1,100
Advertising Expense
2,150
$49,000
$49,000
Expert Solution Preview
Introduction:
In this scenario, we are given a set of financial information, and we are required to prepare an Income Statement, Statement of Owner’s Equity and Balance Sheet for the month of May of the current year. These financial statements will provide a clear picture of the company’s financial position, profitability, and changes in equity over the month of May.
Income Statement for May:
Service Revenue $6,000
Less: Expenses
Telephone Expense $350
Rent Expense $1,100
Advertising Expense $2,150
Net Income (Loss) $2,400
Statement of Owner’s Equity for May:
S. Jones, Capital, May 1 $18,000
Add: Net Income for May 2,400
Less: Drawings for May 550
S. Jones, Capital, May 31 $19,850
Balance Sheet as of May 31:
Assets
Cash $12,000
Accounts Receivable $16,000
Supplies 350
Equipment $16,500
Total Assets $45,850
Liabilities and Owner’s Equity
Notes Payable $13,000
Accounts Payable $12,000
S. Jones, Capital, May 1 $18,000
Add: Net Income for May 2,400
Less: Drawings for May 550
S. Jones, Capital, May 31 $19,850
Total Liabilities and Owner’s Equity $45,850
Conclusion:
In this scenario, we have successfully prepared an Income Statement, Statement of Owner’s Equity, and Balance Sheet for the month of May. These financial statements will provide useful information to the stakeholders of the company, including investors, creditors, and management, to make informed decisions about the company’s financial position, profitability and changes in equity over the month of May.
