Question

In: Accounting

The completed worksheet for Cantu Corporation as of December 31, 2019, after the company had completed...

The completed worksheet for Cantu Corporation as of December 31, 2019, after the company had completed the first month of operation, appears below.

CANTU CORPORATION
Worksheet
Month Ended December 31, 2019
Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet
Account Name Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 76,900 76,900 76,900
Accounts Receivable 11,700 11,700 11,700
Supplies 9,500 5,700 9,500 3,800
Prepaid Advertising 12,600 2,100 12,600 10,500
Equipment 92,500 92,500 92,500
Accumulated Depreciation—Equipment 1,850 1,850 1,850
Accounts Payable 11,700 11,700 11,700
Selena Cantu, Capital 107,700 107,700 107,700
Selena Cantu, Drawing 6,900 6,900 6,900
Fees Income 108,700 108,700 108,700
Supplies Expense 5,700 5,700 5,700
Advertising Expense 2,100 2,100 2,100
Depreciation Expense-Equipment 1,850 1,850 1,850
Salaries Expense 16,500 16,500 16,500
Utilities Expense 1,500 1,500 1,500
Totals 228,100 228,100 9,650 9,650 229,950 229,950 27,650 108,700 202,300 121,250
Net Income 81,050 81,050
108,700 108,700 202,300 202,300



Required:

Prepare an income statement.

Prepare a statement of owner’s equity. The owner made no additional investments during the month.

Prepare a balance sheet.


Analyze:
If the adjustment to Prepaid Advertising had been $4,200 instead of $2,100, what net income would have resulted?

Solutions

Expert Solution

1) income statement

Fees Income =108,700

less: expenses

   Supplies Expense 5,700

Advertising Expense 2,100

Depreciation Expense-Equipment 1,850

Salaries Expense 16,500

Utilities Expense 1,500    = 27650

   Net income = $81,050

  

statement of owner’s equity

Selena Cantu, Capital December 1, 2019 = 0

Add: Contribution = 107,700

Add: net income = 81,050

less:Selena Cantu, Drawing = 6,900

Selena Cantu, Capital December 31, 2019 = 181850

Balance sheet

Assets

Cash 76,900

Accounts Receivable 11,700

Supplies 3,800

Prepaid Advertising 10,500

Equipment   92,500

Accumulated Depreciation—Equipment (1,850) 90650

Total assets 193550

Liabilities and shareholder's equity

Accounts Payable 11,700

Shareholder's equity :

Selena Cantu, Capital 181850

Total Liabilities and shareholder's equity 193550

2) net income = 81,050

Less:advertising expense = 2100   

= 78950

Note:- Out of $4200 adjustment to prepaid adverstising, $2100 had already been adjusted and now remaining $2100 is to be conisdered


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