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In: Accounting

Hipster Optical Trial Balance May 31, 2017 Acct. No Account Title Debit Credit 101   Cash $...

Hipster Optical
Trial Balance
May 31, 2017
Acct. No Account Title Debit Credit
101   Cash $ 17,700
106   Accounts receivable 7,680
124   Office supplies 5,600
128   Prepaid insurance 9,020
163   Office equipment 24,800
201   Accounts payable $ 1,520
230   Unearned service revenue 7,000
301   Peeta Black, capital 55,500
302   Peeta Black, withdrawals 1,400
403   Services revenue 21,200
623   Wages expense 14,200
640   Rent expense 3,500
690   Utilities expense 1,320
  
  Totals $ 85,220 $ 85,220

  
Required:
Using the trial balance provided above, prepare an income statement and statement of changes in equity for the first month ended May 31, 2017, and a balance sheet at May 31, 2017.

  

  

   

  
Analysis Component:
Upon review of the trial balance, the balance at May 31, 2017 for utilities expense is $1,320. Create a journal entry that might have created this balance. Create a second entry when the May utility bill is to be paid in the next month. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)


The balance in the utilities expense account could have arisen on account of one of the following entries.

Solutions

Expert Solution

Hipster Optical
Income Statement
For the Month Ended May 31, 2017
Services revenue 21200
Less: Expenses
Wages expense 14200
Rent expense 3500
Utilities expense 1320
Total expense 19020
Net income $ 2180
Hipster Optical
Statement of Changes in Equity
For the Month Ended May 31, 2017
Peeta Black, capital, May 1, 2017 0
Add: Capital invested 55500
           Net income 2180 57680
57680
Less: Withdrawals 1400
Peeta Black, capital, May 31, 2017 56280
Hipster Optical
Balance Sheet
At May 31, 2017
Assets
Cash 17700
Accounts receivable 7680
Office supplies 5600
Prepaid insurance 9020
Office equipment 24800
Total assets $ 64800
Liabilities and Owner's Equity
Accounts payable 1520
Unearned service revenue 7000
Peeta Black, Capital 56280
Total liabilities and owners' equity $ 64800

Analyze:

Account Titles and Explanation Debit Credit
1 Utilities expense 1320
Cash 1320
(To record utilities expense paid)
2 Utilities expense 1320
Accounts payable 1320
(To record utilities expense incurred but unpaid)

ekkarill92 answered 7 months ago
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