Financial Statements

 Balance Sheet
 Income Statement
 Statement of Owner's Equity
 Statement of Cash Flows
 Note Disclosure

Companies prepare four financial statements from the summarized accounting data:

1. An income statement presents the revenues and expenses and resulting net income or net loss for a specific period
of time. Net income results when revenues exceed expenses. A net loss occurs when expenses exceed revenue.

2. An owner’s equity statement summarizes the changes in owner’s equity for a specific period of time.

3. A balance sheet reports the assets, liabilities, and owner’s equity at a specific date.

4. A statement of cash flows summarizes information about the cash inflows (receipts) and outflows (payments) for a
specific period of time.

a) ARMANDA CO. Income Statement For the Year Ended December 31, 2017
Revenue:

Service revenue: 63600

Expenses

Salaries and wages: 29500

Advertising: 1800

Rent: 10400

Utilities: 3100

 44800

Net income

63600- 44800= 18800

b) ARMANDA CO. Owner’s Equity Statement For the Year Ended December 31, 2017
Owner’s capital, Jan 1, 2017: 48000

Add: Net income: 18800

Less: Owner’s drawing: 6000

Owner’s capital, Dec 31, 2017: 60800

c)
Clear View Park Balance sheet

December 31, 2017

Assets
Cash: 23000

Account receivable: 17500

Equipment: 105500

Total: 146000

Liabilities and owner’s equity

Account payable: 11000

Notes payable: 60000

Total: 71000

Owner’s equity

Owner’s capital: 146000- 71000= 75000

Total liabilities and Owner’s equity: 146000

d)
Snowgo company
Trial balance
December 31, 2017
Debit Credit
Cash $7000
Equipment 88000
Accounts receivable 4000
Pre-paid insurance 6000
Accounts payable 22000
Notes payable 19000
Salaries and wages payable 2000
Owner’s capital 20000
Owner’s drawing 8000
Service revenue 95000
S and W expense 42000
Utilities expense 3000
158000 158000
 e) Journalize
March 1 Cash 20000
Owner’s capital 20000
3 Land 12000
Buildings 2000
Equipment 1000
Advertising Expense 900
Cash 15900
6 Prepaid insurance 600
Cash 600
10 Equipment 1050
Accounts payable 1050
18 Cash 1100
Service revenue 1100
19 Cash 1500
Service revenue 1500
25 Owner’s drawing 800
Cash 800
30 Salaries expense 250
Account payable 1050
Cash 1300
31 Cash 2700
Service revenue 2700
f) Instructions Prepare the debit-credit analysis for each transaction as illustrated on pages 61–65.
Oct. 1: Debit cash 15000; Credit owner’s capital 15000.
2: No transaction.
3: Debit equipment 1900; Credit account payable 1900.
6: Debit account receivable 3800; Credit revenue 3800.
27: Credit cash 1100; debit account payable 1100.
30: Debit wage expense 2500; Credit cash 2500.
g) T-account

Cash
Debit Credit
08.01) 5000 08.12) 2300
08.10) 2600
08.31) 900
Bal. 6200