Question

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		39,100												39,100												39,100
Accounts Receivable		6,500												6,500												6,500
Supplies		6,050									3,500			6,050												2,550
Prepaid Advertising		10,200									1,700			10,200												8,500
Equipment		42,500												42,500												42,500
Accumulated Depreciation—Equipment											850						850												850
Accounts Payable					6,500												6,500												6,500
Selena Cantu, Capital					54,500												54,500												54,500
Selena Cantu, Drawing		4,100												4,100												4,100
Fees Income					57,750												57,750						57,750
Supplies Expense								3,500						3,500						3,500
Advertising Expense								1,700						1,700						1,700
Depreciation Expense-Equipment								850						850						850
Salaries Expense		8,900												8,900						8,900
Utilities Expense		1,400												1,400						1,400
Totals		118,750			118,750			6,050			6,050			119,600			119,600			16,350			57,750			103,250			61,850
Net Income																				41,400									41,400
																				57,750			57,750			103,250			103,250

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 $3,400 instead of $1,700, what net income would have resulted?

Answer 1

Income Statement
Fees Income		57750
Expenses
Supplies Expense	3500
Advertising Expense	1700
Depreciation Expense-Equipment	850
Salaries Expense	8900
Utilities Expense	1400
Total Expense		16350
Net income		41400

statement of owner’s equity
Selena Cantu, Capital	54500
Less Selena Cantu, Drawing	4100
Add Net income	41400
owner’s equity	91800

CANTU CORPORATION
Balance sheet
Asset
Current Asset
Cash	39100
Accounts Receivable	6500
Supplies	2550
Prepaid Advertising	8500
Total Current Asset		56650
Equipment	42500
Less Accumulated Depreciation—Equipment	850	41650
Total Asset		98300
Liabilities and Equity
Accounts Payable		6500
owner’s equity		91800
Total Liabilities and Equity		98300

Analyze:
If the adjustment to Prepaid Advertising had been $3,400 instead of $1,700, what net income would have resulted?

Net income =41400-(3400-1700) =39700