Question

Betty Smith is the owner of the Accurate Tax Service. For the year ended 12/31/17 the following information is available for this service business: Cash, $62,500; Accounts receivable, $3,700; Office Furniture & Fixtures, $11,300; Office Machines & Computers, $15,000; Automobile, $9,500; Accounts Payable, $1,700; Betty Smith Capital, $32,000; Owner draw,$18,600; Revenue from tax preparation, $71,300; Revenue from monthly clients, $43,800; Salaries expense, $12,500; Advertising expense, $900; Rent expense, $6,000; Automobile expense, $1,300; General office expenses, $7,500. Prepare an income statement and balance sheet for the year ended 12/31/17.

Answer 1

Answer:

Profit=86900

Total Assets=102000

Liabilities=1700

Total equity=100300

Explanation:

                                         Betty Smith

                                   Accurate tax service

                                    income statement

                             For the period 12-31-2017

                                                                                                     $

Revenue from tax preparation=71300

Revenue from monthly clients=43800

Total service revenue      ⇒                                                    =   115100

less: Operating expense  

      Salaries =12500

   Advertising expense=900

   Rent expense=6000

   Automobile expense=1300

   General office expense=7500  

Total operating expense ⇒                                                    =(28200)  

                                            Profit                                           86900

                                         Betty Smith

                                   Accurate tax service

                                       Balance sheet

                             For the year ended 12-31-2017

Total Assets:

Cash=62500

Account receiable=3700

Office furniture=11300

office machine and computer=15000

Automobile=9500

Total Assets=102000

Liabilities:

Account payable=1700

Owners Equity:

Betty smith capital=32000-drawing=32000-18600=13400

Retained earning=86900

Total equity=100300

As we know that profit and loss account closes in retained earning account and Assets= liabilities + equity