Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

40PGB_1

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 112

Short Answer

Question: Preparing financial statements from the trial balance and calculating the debt ratio

Preparing financial statements from the trial balance and calculating the debt ratio

Account Title Debit Credit

Office Supplies 1,400

Cash 32,000

Accounts Receivable 9,100

Prepaid Insurance 2,600

Equipment 24,000

Accounts Payable 3,400

Unearned Revenue 1,296

Notes Payable 34,000

Common Stock 20,000

Dividends 3,000

Salaries Expense 1,600

Rent Expense 700

Utilities Expense 100

Service Revenue 15,804

Total Balance $ 74,500 $ 74,500

Requirements 1. Prepare the income statement for the month ended July 31, 2018

The income statement is the statement that records the income and expenses of the business and net income of the business is $13,404

See the step by step solution

Step by Step Solution

Step-by-step SolutionStep 1: Definition of Income Statement

The income statement is defined as a financial statement that records the revenues generated during the year and expenses incurred during the year.

Step 2: Preparation of Income Statement

Sheila Sanchez, Registered Dietician

Income statement

July 31, 2018

Particulars

Amount ($)

Amount ($)

Service Revenue

$15,804

Expenses

Salaries Expense

$1,600

Rent Expense

$700

Utility Expense

$100

Total Expense

$2,400

Net Income

$13,404

Most popular questions for Business-studies Textbooks

Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

Theodore McMahon opened a law office on April 1, 2018. During the first month of operations, the business completed the following transactions:

Apr. 1 McMahon contributed $70,000 cash to the business, Theodore McMahon, Attorney. The business issued common stock to McMahon.

3 Purchased office supplies, $1,100, and furniture, $1,300, on account.

4 Performed legal services for a client and received $2,000 cash.

7 Purchased a building with a market value of $150,000, and land with a market value of $30,000. The business paid $40,000 cash and signed a note payable to the bank for the remaining amount.

11 Prepared legal documents for a client on account, $400.

15 Paid assistant’s semi monthly salary, $1,200.

16 Paid for the office supplies purchased on April 3 on account. 18 Received $2,700 cash for helping a client sell real estate.

19 Defended a client in court and billed the client for $1,700.

25 Received a bill for utilities, $650. The bill will be paid next month.

28 Received cash on account, $1,100.

29 Paid $3,600 cash for a 12-month insurance policy starting on May 1.

29 Paid assistant’s semi monthly salary, $1,200.

30 Paid monthly rent expense, $2,100.

30 Paid cash dividends of $3,200.

Requirements 3. Post the journal entries to four-column accounts in the ledger, using dates, account numbers, journal references, and posting references. Assume the journal entries were recorded on page 1 of the journal.

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.