BASIC FINANCIAL STATEMENT FORMAT SOLE PROPRIETORSHIP

Written by Professor Gregory M. Burbage, MBA, CPA, CMA, CFM

stmts2.doc

Please observe all copyright laws

Note: When preparing financial statements by hand the Income Statement would
usually be prepared first because the net income or loss becomes part of the
Statement of Owners Capital. The Statement of Owners Capital is usually
prepared second because the ending owners capital balance becomes part of the
Balance Sheet.
Note: Corporations are subject to income taxes but sole proprietorships and
partnerships are not. Otherwise the income statements of each are identical.
Income Statement (single-step format):
HANSON RETAIL FOOD STORE
Income Statement
Year Ended December 31, 2006
Net Sales
Rent revenue
Interest revenue

$262,000
6,900
1,400
-------270,300

Total Revenue
Expenses:
Cost of Goods Sold
Salaries and wages
Advertising
Freight out
Depreciation
Taxes and licenses
Rent
Interest expense
Loss on sale of assets
Property taxes

$159,000
45,000
12,400
4,000
5,000
3,000
6,300
350
250
2,000
--------

Total expense

237,300
-------$ 33,000
========

Net Income (loss)

Note: Owners equity statements of corporations are called Statement of

Retained Earnings, those of sole proprietorships are called Statement of
Owners Capital and those of partnerships are called Statement of Partners
Capital.
Statement of Owners Capital:
HANSEN RETAIL FOOD STORE
Statement of Owners Capital
Year Ended December 31, 2006
Beginning balance
Net income (loss)
Withdrawals
Ending balance

7,000
33,000
40,000
2,000
$ 38,000
===========

Note: Balance Sheets of corporations have a Shareholders Equity section

whereas sole proprietorships have an Owners Capital section and partnerships
have a Partners Capital section. Otherwise the Balance Sheets would be
identical.

Balance Sheet:
HANSEN RETAIL FOOD STORE
Balance Sheet
December 31, 2006
ASSETS
Current Assets:
Cash
Short-term investments/marketable securities
Accounts receivable, net
Inventory
Prepaid rent
Office supplies on hand
Total current assets
Long-Lived Assets:
Long-term investments
Land
Building
Machinery & equipment
Less accumulated depreciation
Patents

3,000
6,000
5,000
10,000
2,000
1,000
27,000

$ 10,000
35,000
86,000
50,000
( 23,000)
4,000
162,000
$189,000
========

Total long-lived assets

Total Assets
LIABILITIES
Current Liabilities:
Accounts payable
Notes payable
Interest payable
Wages payable
Total current liabilities

Long-Term Liabilities:
Mortgage payable
Bonds payable
Total long-term liabilities
Total Liabilities

4,200
15,000
1,000
800
21,000

$ 30,000
50,000
80,000
101,000
OWNERS CAPITAL

Owners captial
Total Liabilities and Owners Equity

88,000
$189,000
========