Question

Terrell Company reported the following data at the end of its first year of operations on December 31

Equipment
Accounts payable
Owner investments
Terrell, Withdrawals
Services revenue
Rent revenue
Salaries expense
Advertising expense
Utilities expense
$ 22,000
11,000
26,000
9,000
60,000
13,000
41,000
7,000
5,000
(a) Prepare its year-end income statement.
(b) Prepare its year-end statement of owner's equity, using net income calculated in part a.

Answer 1

(a) Income Statement for the year ending December 31:

Revenue:

Services Revenue: $60,000

Rent Revenue: $13,000

Total Revenue: $73,000

Expenses:

Salaries Expense: $41,000

Advertising Expense: $7,000

Utilities Expense: $5,000

Total Expenses: $53,000

Net Income: $73,000 - $53,000 = $20,000

(b) Statement of Owner's Equity as of December 31:

Owner Investments: $26,000

Net Income: $20,000

Terrell, Withdrawals: $9,000

Total Owner's Equity: $26,000 + $20,000 - $9,000 = $37,000

Step-by-step explanation: