Question

Harry Harper LLC opened for business on July 1, 2017. During July the following transactions were completed.

July 1:                    Harry invested $18,000 cash in the business.

July 1:                    Purchased used truck for $9,000, paying $2,000 cash and the balance on account.

July 3:                    Purchased cleaning supplies for $1,800 on account.

July 5:                    Paid $4,800 cash on two-year insurance policy effective July 1.

July 12:                 Billed customers $1,500 for cleaning services.

July 18:                 Paid $2,000 cash on amount owed on truck and $800 on amount owed on cleaning supplies.

July 20:                 Paid $1,700 cash for employee salaries.

July 21:                 Collected $400 cash from customers billed on July 12.

July 25:                 Billed customers $9,000 for cleaning services.

July 31:                 Paid gas and oil for month on truck $400.

July 31:                 Withdrew $500 cash for personal use.

The following adjusting entries are required for July 31:

Services provided but unbilled and uncollected at July 31 were $1,000.

Harry invested additional $1,500

Depreciation on equipment for the month was $350.

One month of the insurance expired.

An inventory count shows $400 of cleaning supplies on hand at July 31.

Accrued but unpaid employee salaries were $700.

2. Prepare the following financial statements as of July 31, 2017

Income statement                           -

Owner’s equity statement

Balance sheet   

Answer 1

   Income Statement

Revenues:

Income from Cleaning Services $ 1,500

Billed Services $ 9,000

$ 10,500

Expenses:

Depreciation Expense $ 350

Wage Expense $ 2,400

Supplies Expense $ 1,800

Other Expense $ 400

Insurance $ 200

$ 5,150

NET INCOME $ 5,350

  

STATEMENT OF OWNERS EQUITY

Investment at beginning of the month $ 18,000

Net Income $ 5,350

Withdrawals during the month $ (500)

Investment at the end of the month $ 1,500

$ 24,350

BALANCE SHEET AS ON 31st JULY

1. EQUITY & LIABILITIES

a)Owner's Equity $ 24,350

b)Non current Liabilities

Unpaid Salaries $ 700

c)Current Liabilities

Creditors $ 6,000

$ 31,050

2. ASSETS:

a)Non current Assets

Truck (9000-350) $ 8,650

Insurance $ 4,600

b)Current Assets

Inventory

Debtors $ 10,100

Bank and cash $ 7,700

$ 31,050