Question

on Chris educatia target m she settl Instruct (a) W m th (b) $26.03 43.80 (c) L $91.30 (d) (e) $95.000 (b) Write a memo explaining (1) the sequence for preparing the financial statements, and (2) their TAKING IT FURTHER Why isn't the balance sheet dated the same way as the income statement ACCOUNTING IN ACTION ng P1-10A Here are incomplete financial statements for Lee Company: mment. LEE COMPANY Balance Sheet February 28, 2014 Assets Liabilities and Owner's Equity Cash $ 9,500 Liabilities Accounts receivable 5,300 Notes payable Land (1) Accounts payable Building and equipment 41,500 Total liabilities Total assets M. Lee, Capital Total liabilities and owner's equity LEE COMPANY Income Statement Year Ended February 28, 2014 Revenues Service revenues Expenses Salaries expense $32,000 Other expenses (v) Supplies expense 1.500 Total expenses Profit LEE COMPANY Statement of Owner's Equity Year Ended February 28, 2014 M. Lee, capital, March 1, 2013 Add: Investments Profit Less: M. Lee, drawings M. Lee, capital, February 28, 2014 Instructions (a) Calculate the missing amounts (1) to (x). statement of owner's equity: "Year Ended Foru B 59.500 (vi Col Note Instr ВҮР wou Со BY $22.000 62.500 1 relationships between the income statement, statement of owner's equity, and balance sheet 101

Answer 1

Missimg Amounts calculation	Answer
(i)Land($91,300-$9,500-$5,300-$41,500)	$35,000
(ii)Total Assets(It will equal to Total Liabilities & Shareholder's Equity)	$91,300
(iii)Accounts Payable($43,800-$26,000)	$17,800
(iv)M.Lee Capital($91,300-$43,800)	$47,500
(v)Other expenses($59,500-$32,000-$1,500)	$26,000
(vi)Profit($95,000-$59,500)	$35,500
(vii)Investments($62,500-$22,000-$35,500)	$5,000
(viii)Profit(Same as vi)	$35,500
(ix)M.Lee Drawings($62,500-$47,500)	$15,000
(x)M.Lee Capital(Same as iv)	$47,500
The sequence of preparing a Financial Statements is as follows:
The 1st step is to prepare the Income statement of the entity which contains all the Income and expenses for the year which the company has made
If the Income is excess of Expenses then there will be Net Profit and if the Expenses are excess of Income then there will be Net Loss.
The 2nd Step is to prepare the Statement of Owner's Equity which shows the details of the change in Owner's capital or Shareholder's Equity of the entity due to the transaction
taken place in the Financial Year.
The 3rd step is to prepare the Balance Sheet of the entity which contains the details of the Assets and Liabilities as on Year end.
The total of Assets and Liabilities and Shareholder's Equity shall always balance to agree with the Matching concept.
The order of the preparation of the Financial Balance sheet is very important as the Net Profit/Net Loss derived from it shall be transferred to
Statement of Owner's Equity where it is adjusted to find the closing capital or Ending Shareholder's Equity of the entity
Then after the Statement of owner's Equity is completed, the balance at the end of year in the statement goes to Balance sheet under the heading
of Shareholder's Equity and then after all the posting are done with the Balance Sheet is tallied and completed
As it can be seen that the final figures of each preceding statement is carried over to the succeeding statement. So to prepare and complete
a financial statement the order described above is very important