Question

The following information relates to SFS Co . for the year 2020. SFS, Capital, January 1, 2020……. $ 48,000

Advertising expense.. $ 1,800

SFS, Drawings, during 2020………… 7,000

Rent expense ………12,000

Service revenue …………………………………67,000 ………

Utilities expense……. 3,100

Salaries expense…………………………………. 30,000

Instructions After analyzing the data, prepare an income statement and an owner’s equity statement for the year ending December 31, 2020.

Answer 1

Income Statement for the Year Ended December 2020
Service Revenue		67000
Less:
Rent Expenses A/c	12000
Utilities Expenses A/c	3100
Salary Expenses A/c	30000	45100
Net Profit   ( B / F)		21900
Net Profit Attributable to Capital			21900
Owners Capital A/c
Dr.	Capital A/c	Cr.
Particulars	Amount	Particulars	Amount
To Drawings A/c	7000	By Balance A/c	48000
		By Net Profit ( B/f)	21900
To Balance C/d	62900
Total	69900	Total	69900
Closing Balance Of Owners Cpital A/c ( If salary expenses is treated as Expenses) = 62900
Paying Salary will not affects the Owners Equityy and Same shall be treated as Buisness Expenses