PM CTU Portal Accounting For Non-Accounting Majors
72023 102 Pm Ctu Portal Accounting For Non Accounting Majors Acc3
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
Sample Paper For Above instruction
Introduction
The preparation of financial statements, including the Income Statement, Statement of Owner’s Equity, and Balance Sheet, is essential for providing a clear and comprehensive overview of a business’s financial performance and position. In this paper, I will prepare these statements based on the provided financial data for S. Jones's business for the month of May, adhering to standard accounting principles.
Income Statement
The Income Statement summarizes the revenues and expenses to determine the net income or loss for the period. For S. Jones’s business, the components are as follows:
- Revenues: Service Revenue of $6,000
- Expenses:
- Telephone Expense: $350
- Rent Expense: $1,100
- Advertising Expense: $2,150
Total Expenses: $350 + $1,100 + $2,150 = $3,600
Net Income: $6,000 (Revenues) - $3,600 (Expenses) = $2,400
Statement of Owner’s Equity
The Statement of Owner’s Equity reflects changes in the owner’s capital during the period. It starts with the opening capital, adds net income, and subtracts any drawings:
- Opening Capital, S. Jones: $18,000
- + Net Income for May: $2,400
- - Drawings: $550
Ending Capital = $18,000 + $2,400 - $550 = $19,850
Balance Sheet
The Balance Sheet presents the financial position at the end of May, listing assets, liabilities, and owner’s equity:
Assets
- Cash: $12,000
- Accounts Receivable: $16,000
- Supplies: $350
- Equipment: $16,500
Total Assets: $12,000 + $16,000 + $350 + $16,500 = $44,850
Liabilities
- Notes Payable: $13,000
- Accounts Payable: $12,000
Total Liabilities: $13,000 + $12,000 = $25,000
Owner’s Equity
- Ending Capital: $19,850
Total Liabilities and Owner’s Equity: $25,000 + $19,850 = $44,850
This confirms that the balance sheet balances, with total assets equaling total liabilities and owner’s equity, in accordance with fundamental accounting principles.
Conclusion
Based on the provided data, the financial statements offer a detailed view of S. Jones’s business operations for May. The net income of $2,400 indicates profitability, while the balance sheet reflects a solid financial position with assets totaling $44,850 and liabilities totaling $25,000. Maintaining accurate financial records through these statements is crucial for effective business management and decision-making.
References
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- Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial Accounting. McGraw-Hill Education.
- Horngren, C. T., Sundem, G. L., & Elliott, J. A. (2018). Introduction to Financial Accounting. Pearson.
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