Question

Pam Jones owns a business named Sunny Renovation. Below is the account information of Sunny Renovation at 30 June 2019.

Cash in Bank	$ 45,600		Accounts receivable	$235,200
Supplies	52,800		Prepaid Insurance	16,000
Accounts payable	67,400		Unearned revenue	18,000
Service income	372,000		Salary expense	222,000
Pam Jones, Capital	?		Equipment	130,000

  
Required:
Using the accounting equation, prepare the balance sheet for Sunny Renovation at 30 June 2019 (please use the narrative/vertical format).

Answer 1

Net profit = Income - Expenses

Net profit = $ 372,000 - $ 222,000

Net profit = $ 150,000

Assets = Cash in Bank + Supplies + Accounts receivable + Prepaid insurance + Equipment

Assets = $ 45,600 + $ 52,800 + $ 235,200 + $ 16,000 + $ 130,000

Assets = $ 479,600

Liabilities = Accounts payable + Unearned revenue

Liabilities = $ 67,400 + $ 18,000

Liabilities = $ 85,400

Capital = Assets - Liabilities - Net profit

Capital = $ 479,600 - $ 85,400 - $ 150,000

Capital = $ 244,200

So, Pam Jones, Capital is $ 244,200.