Chapter 1 Introduction to Accounting and Business 45 Accounts payable Accounts r
ID: 2548748 • Letter: C
Question
Chapter 1 Introduction to Accounting and Business 45 Accounts payable Accounts receivable Cash Fees earned Land Miscellaneous expense 69,500 Rent expense 285,000 Supplies 90,500 Supplies expense $36,000 5,500 4,100 28,500 510,000 912,500 Utilities expense Wages expense 544,000 6,400 Instructions 1. Prepare an income statement for the year ended December 31, 2019. 2. Prepare a statement of owner's equity for the year ended December 31, 2019. 3. Prepare a balance sheet as of December 31, 2019. 4. What item appears on both the statement of owner's equity and the balance sheet? R 1-3A Financial statements OBJ.Explanation / Answer
PART-1)
Income statement
Fees earned
912,500
Expenses:
Wages expense
510,000
Rent expense
36,000
Supplies expense
4,100
Utilites expense
28,500
Miscellaneous expense
6,400
Total expenses
585,000
Net Income
327,500
PART-2)
Statement of owner’s equity
Capital, Jan 1
670,000
Net income for the year
327,500
Minus: Withdrawals
42,000
Increase in owner’s equity
285,500
capital, December 31
955,500
Part-3)
Balance Sheet
Assets
Amount
Liabilities
Amount
Cash
190,500
Accounts payable
69,500
Supplies
5,500
Owners’ equity
Land
544,000
Capital
955,500
Accounts receivable
285,000
Total assets
1,025,000
Total liabilities and owner’s equity
1,025,000
Part-4)
The capital amount of $ 955,500 appears in both statements, and also the amount by accounts receivable is the same then the rise in Owner’s equity.
Income statement
Fees earned
912,500
Expenses:
Wages expense
510,000
Rent expense
36,000
Supplies expense
4,100
Utilites expense
28,500
Miscellaneous expense
6,400
Total expenses
585,000
Net Income
327,500
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