Question

APPLY THE CONCEPTS: Construct the income statement

When constructing the income statement, it is important to understand that the income statement reports the revenues and expenses for a period of time, based on the matching concept. This concept is applied by matching the expenses with the revenue generated during a period by those expenses. The excess of the revenue over the expenses is called net income or net profit.

Pleasant Co. has compiled the following account balances from its general ledger on July 31, 20Y8 (the last day of its fiscal year).

+ Account balances Account Amount Cash $62,050 Accounts receivable 135,700 Supplies 13,540 Prepaid insurance 24,560 Equipment 420,089 Accounts payable 62,760 Notes payable 97,500 Common stock 108,459 Retained earnings 280,280 Dividends 45,500 Fees earned 230,000 Service revenue 150,000 Advertising expense 10,000 Wages expense 150,000 Interest expense 15,270 Utilities expense 8,500 Rent expense 43,790

Use the information given to create Pleasant Co.’s annual financial statements. Construct Pleasant’s income statement for 20Y8.

Pleasant Co.
Income Statement
For the Year Ending July 31, 20Y8
Revenues:
Fees earned		$
Service revenue
Total revenues		$
Expenses:
Wages expense	$
Interest expense
Rent expense
Utilities expense
Advertising expense
Total expenses		$
Net income		$

Feedback

From the balances above, select the appropriate revenue and expense items, and compute the appropriate subtotals.

APPLY THE CONCEPTS: Construct the Statement of Stockholders' Equity.

The statement of stockholders' equity shows the change in statement of stockholders' equity as a result of net income and any dividends. It also serves as an important link between the income statement and the balance sheet in that it translates the effects of net income into an updated number for statement of stockholders' equity. Construct Pleasant’s statement of stockholders' equity for 20Y8.

Pleasant Co.
Statement of Stockholders' Equity
For the Year Ending July 31, 20Y8
	Common Stock	Retained Earnings	Total
Balances, August 1, 20Y7	$	$
Net income
Dividends
Balances, July 31, 20Y8	$	$

Feedback

Hover over the statement of stockholders' equity definition in the earlier step to review the construction of this statement. Remember that Net Income or Net Loss from the statement in the prior step is the linking value between these two statements.

APPLY THE CONCEPTS: Construct the balance sheet

The balance sheet, also known as the statement of financial position, shows the company’s assets and the claims against those assets in the form of liabilities and stockholders' equity. Unlike financial statements that display financial performance over a given interval of time, the balance sheet is a snapshot of a financial position at a given point in time.

Construct Pleasant’s balance sheet in account form for 20Y8.

Pleasant Co.
Balance Sheet
July 31, 20Y8
Assets
	$
Total assets		$
Liabilities
	$
Total liabilities		$
Stockholders' Equity
	$
Total stockholders' equity		$
Total liabilities and stockholders' equity		$

Answer 1

as per the given information , we will fill the provided formats.

Pleasant Co.
Income Statement
For the Year Ending July 31, 2018
Revenues:
Fees earned	F	$ 230,000
Service revenue	S	$ 150,000
Total revenues	R= F+S	$ 380,000
Expenses:
Wages expense	$	$ 150,000
Interest expense		$   15,270
Rent expense		$   43,790
Utilities expense		$     8,500
Advertising expense		$   10,000
Total expenses	E	$ 227,560
Net income	I=R-E	$ 152,440

Pleasant Co.
Statement of Stockholders' Equity
For the Year Ending July 31, 20Y8
	Common Stock	Retained Earnings	Total
Balances, August 1, 20Y7	$        108,459	$            280,280	$ 388,739
Net income ( from above)	152440		152440
Dividends( given)	$        -45,500		$ -45,500
Balances, July 31, 20Y8	$        215,399	$            280,280	$ 495,679

Pleasant Co.
Balance Sheet
July 31, 20Y8
Assets
	$
Current Asset
Cash	62050
Accounts receivable	135700
Supplies	13540
Prepaid insurance	24560
Non current Asset
Equipment	420089
Total assets	(total of the above)	$            655,939
Liabilities
	$
Current Liability
Accounts payable	$         62,760
Notes payable	$         97,500
Total liabilities	L= sub total	$            160,260
Stockholders' Equity
	$
Total stockholders' equity	E	$            495,679
Total liabilities and stockholders' equity	L+E	$            655,939