Prepare income statement and statement of owne equity

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Reference no: EM132451634

Question 1: The following equation shows the transactions of Cotton Cleaning Service during May. The business is owned by Taylor Cotton.

	Assets							=	Liab.	+	Owner's Equity
	Cash	+	Accts. Rec.	+	Supp.	+	Equip.	=	Accts. Pay.	+	T.Cotton, Capital	+	Rev.	-	Exp.
Balances, May 1	14,600	+	2,600	+	5,400	+	33,400	=	6,600	+	49,400	+	0	-	0
Paid for utilities	- 940														+ 940
New balances	13,660	+	2,600	+	5,400	+	33,400	=	6,600	+	49,400	+	0	-	940
Sold services for cash	+ 4,940												+ 4,940
New balances	18,600	+	2,600	+	5,400	+	33,400	=	6,600	+	49,400	+	4,940	-	940
Paid a creditor	- 1,900								- 1,900
New balances	16,700	+	2,600	+	5,400	+	33,400	=	4,700	+	49,400	+	4,940	-	940
Sold services on credit			+ 2,700										+ 2,700
New balances	16,700	+	5,300	+	5,400	+	33,400	=	4,700	+	49,400	+	7,640	-	940
Paid salaries	- 8,700														+ 8,700
New balances	8,000	+	5,300	+	5,400	+	33,400	=	4,700	+	49,400	+	7,640	-	9,640
Paid telephone bill	- 310														+ 310
New balances	7,690	+	5,300	+	5,400	+	33,400	=	4,700	+	49,400	+	7,640	-	9,950
Withdrew cash for personal expenses	- 2,600										- 2,600
New balances	5,090	+	5,300	+	5,400	+	33,400	=	4,700	+	46,800	+	7,640	-	9,950

Required:

Question 1: 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, 2019.

Reference no: EM132451634

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