000 LESS WITHDRAWALS 5,000 INCREASE IN OWNER'S EQUITY 31,000ERIC WO...
36,000
Less withdrawals
5,000
Increase in owner's equity
31,000
Eric Wood, capital, March 31, 2011
$31,000
Balance Sheet
For the Three Months Ended March 31, 2011
Assets
Owner's
Equity
Land
$13,000 Eric Wood, Capital
$31,000
Cash
10,860
Liabilities
Accounts payable
2,670 Accounts receivable
2,225
Answer
Errors in the Eric Wood, CPA, financial statements include the following:
(1)
Miscellaneous expense is incorrectly listed after utilities expense in the income statement. Miscellaneous expense should be
listed as the last expense, regardless of the amount.
(2)
The operating expenses are incorrectly added. Instead of $28,000, the total should be $32,660.
(3)
Because operating expenses are incorrectly added, the net income is incorrect. It should be listed as $9,340.
(4)
The statement of owner's equity should be for a period of time instead of a specific date. That is, the statement of owner's
equity should be reported "For the Three Months Ended March 31, 2011."
(5)
The amount of the owners' equity is incorrect. It should be $24,340.
(6)
The name of the company is missing from the balance sheet heading.
(7)
The balance sheet should be as of "March 31, 2011," not "For the Three Months Ended March 31, 2011."
(8)
Cash, not Land, should be the first asset listed in the balance sheet.
(9)
Accounts Payable is incorrectly listed as an asset in the balance sheet. Accounts Payable should be listed as a liability.
(10)
Liabilities should be listed in the balance sheet ahead of owner's equity.
(11)
Accounts Receivable is incorrectly listed as a liability in the balance sheet. Accounts Receivable should be listed as an asset.
(12)
The total assets and the total liabilities and owner’s equity do not foot.
Correctly prepared financial statements for Eric Wood, CPA, are shown below.
Eric Wood, CPA
Income Statement
Fees earned
$42,000
Operating expenses:
Salary expense
$9,735
Rent expense
5,200
Advertising expense
3,950
Utilities expense
3,225
Answering service expense
2,550
Supplies expense
4,000
Miscellaneous expense
4,000
Total operating expenses
32,660
Net income
$9,340
Statement of Owner's Equity
Eric Wood, capital, January, 1, 2011
$ 0
Investment on January 1, 2011
$20,000
Net income for three months
9,340
$29,340
Increase in owner's equity
24,340
Eric Wood, capital, March 31, 2011
$24,340
March 31, 2011
Assets
Liabilities
Cash
$10,860
Accounts payable
$ 2,670
Accounts receivable
2,225
Owner's Equity
Supplies
925
Eric Wood, Capital
24,340
Land
13,000
Total liabilities and
Total assets
$27,010
owner's equity
$27,010
Add Question Here
Essay
0 points
Modify
Remove
Question Using the following accounts and their amounts, prepare in good format an Income Statement for Bright Futures Company, month ended
August 31, 2011:
Telephone Expense
$1,150
Cash
$3,000
Accounts Payable
$1,540
Jason Bright, Drawing
$800
Fees Earned
$15,700
Rent Expense
$1,400
Supplies
$140
Accounts Receivable
$1,500
Computer Equipment
$20,000
Jason Bright, Capital
$14,320
Wages Expense
$4,800
Utilities Expense
$750
Notes Payable
$2,400
Office Expense
$420
Answer
Bright Futures Company
For Month Ended August 31, 2011
Expenses:
Wages Expense
$4,800
Rent Expense
1,400
Telephone Expense
1,150
Utilities Expense
750
Office Expense
420
Total Expenses
8,520
Net Income
$ 7,180
Question Using the following accounts and their amounts, prepare in good format a Statement of Owner’s Equity for Bright Futures Company,
month ended August 31, 2011:
Statement of Owner’s Equity
Jason Bright, Capital, August 1, 2011
$ 14,320
Net Income
7,180
Subtotal
$ 21,500
Less: Withdrawals
800
Jason Bright, Capital August 31, 2011
$ 20,700
Question Using the following accounts and their amounts, prepare in good format a Balance Sheet for Bright Futures Company, month ended
August 31, 2011
Assets
Cash
$ 3,000
Accounts Receivable
1,500
Supplies
140
Computer Equipment
20,000
Total Assets
$ 24,640
Total Liabilities and Owner’s Equity
Liabilities:
Accounts Payable
$ 1,540
Notes Payable
2,400
Total Liabilities
$ 3,940
Jason Bright, Capital
20,700
Total Liabilities and Owner’s Equity
$ 24,640
Question The account balances of Trendsetter Travel Services at December 31, 2011 are listed below:
Accounts Payable
$12,000
J. Trendsetter, Capital 1/1/11
$10,000
Accounts Receivable
6,000
Supplies
1,000
Cash
18,000 Taxes
Expense
1,300
Computer Equipment
21,000
Utilities Expense
8,000
Fees Earned
70,000
Wages Expense
25,000
Rent Expense
10,000
Supplies Expense
1,700
Prepare an income statement, statement of owner’s equity, and a balance sheet as of December 31, 2011.
Trendsetter Travel Services
For the Year Ended December 31, 2011
Fees Earned
$ 70,000
Operating
Expenses:
Wages
Expense
$
25,000
Rent
Expense
10,000
Utilities
Expense
8,000
Supplies
Expense
1,700
Taxes Expense
1,300
Total Operating Expenses
$46,000
Net
Income
$24,000
Net Income for the year
24,000
J. Trendsetter, Capital, 12/31/11
$34,000
December 31, 2011
Assets
Liabilities
Cash
$18,000 Accounts
Payable
$12,000
Accounts Receivable
6,000
Computer Equipment
21,000
Owner’s Equity
Supplies
1,000 J. Trendsetter, Capital
34,000
$46,000
Total Assets
$ 46,000
Total Liabilities and Owner’s Equity
Question The accountant for Flagger Company prepared the following list of account balances from the company’s records for the year ended
December 31, 2011:
Fees Earned
$165,000
Cash
$ 30,000
Accounts Receivable
14,000
Selling Expenses
44,000
Equipment
42,000
Flagger,
Capital
36,000
Accounts Payable
12,000
Interest Income
3,000
Salaries & Wages Expense
40,000
Rent Expense
51,000
Income Taxes Payable
5,000
Prepaid Rent
2,000
Notes Payable
20,000
Income Taxes Expense
18,000
Prepare an Income Statement for Flagger Company in good form.
Flagger Company
Revenues:
Fees earned
$ 165,000
Interest income
3,000
$ 168,000
Expenses:
Rent expense
$ 51,000
Salaries & wages expense
40,000
Selling
expenses
44,000
Income taxes expense
18,000
153,000
Net income
$ 15,000