The following items are taken from the financial statements of KON Inc. (HR consulting service company)...

The following items are taken from the financial statements of KON Inc. (HR consulting service company) for its first fiscal year ended December 31, 2019:

Service Revenue	$61,000	Advertising Expense	$1,600
Cash	$15,000	Common Shares (share Capital) Jan 1, 2019	$0
Depreciation Expense	$1,000	Dividends	$5,000
Note Payable	$70,000	Prepaid Insurance	$6,000
Rent Expense	$12,400	Retained Earnings Jan 1, 2019	$0
Salaries Expense	$30,000	Salaries Payable	$3,000
Insurance Expense	$2,400	Accumulated Depreciation, Video Equip	$10,000
Video Equipment	$210,000	Income Tax Expense	$3,000

Instructions: From the above accounts use ONLY the accounts that you need and…

(A) Prepare an Income Statement, in good form for 2019

(B) Prepare a Statement of Changes in Equity for 2019

Additional Information: During 2019, the company Issued New Common Shares for $10,000

Solutions

Expert Solution

a. Income Statement

HR Consulting service company
Income Statement
For the Months Ended 2019
Revenue:
Services Revenue		$ 61,000
Total Revenue		$ 61,000
Expenses:
Salaries Expense	$ 30,000
Insurance Expense	$ 2,400
Advertising Expense	$ 1,600
Rent Expense	$ 12,400
Depreciation Expense	$ 1,000	$ 47,400
Earnings before Tax		$ 13,600
Income Tax		-$ 3,000
Net Income		$ 10,600

b. Statement of changes in equity
HR Consulting service company
Statement of change in Shareholders Equity
For the Months Ended 2019
Beginning Capital	$ -
Additional Capital	$ 10,000
Total Common Stock	$ 10,000
Retained Earnings, Oct,1,2019	$ -
Add: Net Income	$ 10,600
Less:Dividend	-$ 5,000
Retained Earnings, Dec,31,2019	$ 5,600
Total Shareholders Equity	$ 15,600

ekkarill92 answered 1 year ago

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