Question

Your friend James Smith, knowing that you are a ‘top gun’ accounting student, has asked you to prepare a balance sheet and a statement of comprehensive income from the following information.

Items	Amount ($)
Salaries expense	1236
Cash sales	132000
Insurance expense	932
Cost of supplies used to make cash sales	32400
Equipment	3200
Electricity and telephone expense	9560
Accounts payable	14020
Bank overdraft	2300
Wages expense	38900
Land and buildings	125000
Vehicles	23230
Mortgage on land	23000
Tax payable	5000
Shareholder’s equity	58138

Required

Prepare an Income Statement and balance sheet.

Answer 1

Answer- Income Statement

Sales revenue		$132,000
Less:- Expenses
Cost of goods sold	$32,400
Salaries expenses	$1,236
Insurance expenses	$932
Electricity and telephone expenses	$9,560
Wages expenses	$38,900
Total expenses		$83,028
Net Income		$48,972

Balance Sheet

Assets:-
Equipment		$3,200
Land and building		$125,000
Vehickes		$23,230
Total Assets		$151,430
Liabilities
Account payable	14,020
Bank overdraft	2,300
Tax payable	5,000
Total current liabilities		$21,320
Mortgage on land		$23,000
Total liabilities		$44,320
Shareholders' equity ($58,138+$48,972		$107,110
Total liabilities and shareholders equity		$151,430

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