Reference no: EM132471866

Problem - Peterson Accounting Company has the following account balances: Cash, £5,000; Accounts Receivable, £2,000; Prepaid Rent £1,500; Supplies, £850; Equipment, £6,000; Trucks, £15,000; Accounts Payable, £2,500; Common Stock, £20,000; Retained Earnings £7,850. Business transactions during December are presented as follows:

Company received cash from clients for services, £4,500

Peterson paid to creditors £500,

Paid office rent for the month of December, £750,

Company billed client for accounting services on account, £5,200

Supplies were purchased on account, £650,

Company received cash from clients billed previously, £6,000

Peterson received an invoice for office equipment repair services from Office Extra for December (the invoice will be paid next month), £850,

Peterson paid monthly salaries, £2,700,

Utilities expense were paid, £280,

Miscellaneous expenses were paid, £350,

Dividends were paid, £550.

Required -

1. Prepare Income Statement for the period ended December 31, 2017.

2. Prepare Balance Sheet as on December 31, 2017.