Practice Questions:
Income Statement, Statement of Owner's Equity, Balance Sheet
The accountant for Case Company determined the following balances, listed in random order, for the month ended October 31. No investments were made during October. Use the following accounts to answer the next three questions.
| Accounts Payable |
= |
$3,200 |
|
Prepaid Insurance |
= |
$1,800 |
|
Jane Doe, Capital |
= |
$35,180 |
| Cash |
= |
$6,580 |
|
Mowing Income |
= |
$12,800 |
|
Equipment |
= |
$32,400 |
| Wages Expense |
= |
$5,400 |
|
Rent Expense |
= |
$2,200 |
|
Jane Doe, Drawing |
= |
$2,800 |
Question 1: Income statement question: using the
accounts above, calculate net income for the
month of October
Answer for question 1
Question 2: Statement of Owner's Equity question:
after calculating Net Income, calculate capital as of October
31
Answer for question 2
Question 3: Balance sheet question: after calculating
Net Income and ending capital for the month of October, calculate
total assets as it would appear on the Balance
Sheet.
Answer for question 3
Question 4: Balance sheet question: after calculating
Net Income and ending capital for the month of October, enter the
total of Liabilities + Owner's Equity in the
box below as it would appear on the Balance Sheet on October 31.
Answer for question 4
Question 1 answer:
Hint:
Revenue
- Expenses
= Net Income
Mowing Income $12,800
- Wages Expense 5,400
- Rent Expense 2,200
= Net Income $5,200
Question 2 answer:
The Statement of Owner's Equity will calculate the capital at the
end of the month:
Beginning capital: 35,180
+ Investments 0
(zero per the instructions)
+ Net Income:
5,200 (from the previous question about the Net Income)
- Draw
2,800
=Ending capital: $37,580
Hint: BIND with an E
Question 3 answer:
Assets:
Cash
$6,580
Prepaid Insurance 1,800
Equipment 32,400
Total assets = $40,780
Question 4 answer:
Liabilities (AP): $3,200
Owner's Equity: $37,580 as calculated on a previous question
=
$40,780 Total Liabilities and Owner's Equity
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