Question

1. Prepare in good format, an income statement.

2. Prepare in good format, a statement of owner’s equity.

3. Prepare a classified year-end balance sheet. (Note: A $9,000 installment on the long-term note payable is due within one year.)

Account	Debit	Credit
Cash	$ 112,000
Accounts receivable	27,000
Prepaid rent	15,000
Prepaid Insurance	9,000
Office supplies	3,300
Office equipment	38,000
Accumulated depreciation–Equipment		$3,200
Building	288,000
Accumulated depreciation–Building		42,000
Land	700,000
Accounts payable		25,800
Salaries payable		14,500
Interest payable		2,500
Long-term note payable		72,000
P. Blessinger, Capital		910,000
P. Blessinger, Withdrawals	200,500
Service fees earned		430,800
Salaries expense	90,000
Insurance expense	5,200
Rent expense	5,000
Depreciation expense–Equipment	800
Depreciation expense–Building	7,000
Totals

Answer 1

a) Income statement :

Service fees earned		430800
Less: Expense
Salaries expense	90000
Insurance expense	5200
Rent expense	5000
Depreciation expense–Equipment	800
Depreciation expense–Building	7000
Total expense		108000
Net income		322800

2. Prepare in good format, a statement of owner’s equity.

Beginning balance of P. Blessinger, Capital	910000
Add: Net income	322800
Less: P. Blessinger, Withdrawals	-200500
Ending balance of P. Blessinger, Capital	1032300

3. Prepare a classified year-end balance sheet. (Note: A $9,000 installment on the long-term note payable is due within one year.)

Assets
Current assets
Cash		112000
Account receivable		27000
Prepaid rent		15000
Prepaid Insurance		9000
Office supplies		3300
Total current assets			166300
Non Current assets
Office equipment	38000
Accumulated depreciation–Equipment	-3200	34800
Building	288000
Less; Accumulated depreciation–Building	-42000	246000
Land		700000
Total non Current assets			980800
Total assets			1147100
Liabilities and owner's equity
Current liabilities
Account payable		25800
Salaries payable		14500
Interest payable		2500
Notes payable		9000
Total current liabilities			51800
Long term liabilities
Notes payable			63000
Total liabilities			114800
Owner's equity
P. Blessinger, Capital			1032300
Total liabilities and owner's equity			1147100