Reference no: EM13884469

Preparation and Interpretation of Financial Statements

Bachino's Pizza's accounts follow. The company has just completed its first year of operations ended September 30, 2014.

Accounts Payable	$  21,000
Accounts Receivable	26,400
Cash	5,200
Delivery Truck Rent Expense	14,400
Equipment	12,600
Equipment Rental Expense	5,800
Marketing Expense	3,000
Owner's Capital	4,000*
Pizza Revenue	164,000
Salaries Expense	112,000
Salaries Payable	1,400
Supplies	800
Supplies Expense	8,200
Withdrawals	2,000
*Represents the initial investment by the owner.

Required

1. Prepare Bachino's Pizza's income statement, statement of owner's equity, and balance sheet.

2. Why would Bachino's Pizza's owner set his business up as a sole proprietorship and not a partnership? Discuss how profits and obligations are shared in the two forms of business organizations.