Question

Prepare an Income Statement and a Balance Sheet for the month of July, 2017 for Strand Corp
Transactions:
1	Strand invested $25,000 in the business in exchange for common stock
2	Strand purchased equipment costing $10,000 by borrowing from the bank
3	Strand sold $100,000 worth of consulting services on account
4	Strand paid Wages of $50,000 and Rent of $25,000
5	Strand purchased $2,000 of supplies on account
6	Strand collected $75,000 from customers sold to on account (#3 above)
7	Strand paid the bank 50% of what they owed them

Answer 1

First we can create a Trial Balance

	Debit	Credit
Common stock		$     25,000
Cash ($25,000-50,000-25,000+75,000-5,000)	$     20,000
Equipments	$     10,000
Borrowings ($10,000-5,000)		$       5,000
Accounts receivable ($100,000-75,000)	$     25,000
Service revenue		$   100,000
Wages expenses	$     50,000
Rent expenses	$     25,000
Supplies	$       2,000
Accounts payable		$       2,000
Total	$   132,000	$   132,000

Strand Corp
Income Statement
For the month ended July 2017
Service revenue		$   100,000
Less: Expenses
Wages expenses	$   50,000
Rent expenses	$   25,000
Total expenses		$     75,000
Net income		$     25,000

Strand Corp
Balance Sheet
As at 31 July 2017
Assets
Current assets
Cash	$   20,000
Supplies	$     2,000
Accounts receivable	$   25,000
Total current assets		$   47,000
Property, Plant and Equipment
Equipment		$   10,000
Total Assets		$   57,000
Liabilities
Current liabilities
Accounts payable	$     2,000
Borrowings	$     5,000
Total liabilities		$     7,000
Stockholders equity
Common stock	$   25,000
Retained earnings	$   25,000
Total Stockholders equity		$   50,000
Total liabilities and stockholders Equity		$   57,000

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