Question

The following equation shows the transactions of Cotton Cleaning Service during May. The business is owned by Taylor Cotton Assets Accts. Rec. + Supp. + Equip. = 3,000 + 5,800 + 33,800 = Liab. + Owner's Equity Accts. T.Cotton, Pay. + Capital + Rev. - 7,000 + 50,600 + 0 - Exp. 3,000 + 5,800 + 33,800 = 7,000 + 50.600 + + 980 980 Cash + 15,000 + - 980 14,020 + + 4.980 19.000 + -2,100 16,900 + 0 - + 4.980 4,980 - 3,000 + 5,800 + 33,800 = 50,600 + 980 7,000 + - 2.100 4,900 + 50.600 + 980 Balances, May 1 Paid for utilities New balances Sold services for cash New balances Paid a creditor New balances Sold services on credit New balances Paid salaries New balances Paid telephone bill New balances Withdrew cash for personal expenses New balances 3,000 + 5,800 + 33,800 = + 2,900 5,900 + 5,800 + 33,800 = 4.980 - + 2.900 7,880 - 4,900 + 50,600 + 5,900 + 5,800 + 33,800 = 4,900 + 50,600 + 7,880 - 16,900 + - 8,900 8,000 + - 314 7,686 + - 3,000 4,686 + 980 + 8,900 9,880 + 314 10,194 5,900 + 5,800 + 33,800 - - 4,900 + 7,880 - 50,600 + - 3,000 47,600 + 5,900 + 5,800 + 33,800 = 4,900 + 7,880 - 10,194 Required: Analyze each transaction carefully. Prepare an income statement and a statement of owner's equity for the month. Prepare a balance sheet for May 31 Complete this question by entering your answers in the tabs below. Income Statement Stmt of Owners Eqty um Balance Sheet Analyze

Answer 1

Solution:

a.) Income Statement

Revenue
Fees Income		$7,880
Expenses:
Salaries expenses	$8,900
Telephone expenses	$314
Utilities expenses	$980
Total expenses		$10,194
Net income (loss)		$(2,314)

b.) Statement of Owner's Equity

Taylor Cotton,Cap Capital, May 1		$50,600
Net loss for May	$2,314
Less: withdrawal for May	$3,000
Decrease in Capital		$5,314
Taylor Cotton, Capital May, 31		$45,286

c.)Balance Sheet

Assets		Liabilities
Cash	$4,686	Account payable	$4,900
Accounts receivable	$5,900
Supplies	$5,800	Owner' Equity
Equipment	$33,800	Capital	$45,286
Total assets	$50,186	Total liabilities and Owner's Equity	$50,186

d.)

Owner's equity =$45,286