Financial statements LOB CHECK FIGURE: All Omar, Capital, March 31, 2020 - $20.200 Using your answer from Exercise

Question

Financial statements LOB CHECK FIGURE: All Omar, Capital, March 31, 2020 - $20.200 Using your answer from Exercise 1-22, prepare an income statement, statement of changes in equity, and bal- ance sheet for March 2020. Analysis Component: Review Omar's income statement. Does the profit of $900 represent $900 of cash? Explain MISU ueny te du us) for each Exercise 1-22 Effects of transactions on the accounting equation 106,7 eXcel CHECK FIGURE: Accounts payable, March 31, 2020 = $2,350 a. Ali Omar invested $4,300 cash and $15,000 of equipment to start his business, Omar's Yard Care. b. Purchased various supplies on account: $1,600. c. Bought supplies on credit; $950. d. Omar signed a $4,000 contract to do yard work beginning in May. e. Did work for a client on account: $550. f. Performed services for a customer on credit; $600. g. Paid $200 for the supplies purchased in (c). h. Paid $250 for advertising online. i. Collected the amount owed from the customer in (f).

Help In Homework · Accepted Answer

Income statement Service Revenue $ 1,150.00 Less: Expenses: Advertising Expenses $ 250.00 Net Income $ 900.00 Statement of changes in equity Common Stock: Beginning Balance $ - Add: Issued during the period $ 19,300.00 Ending Balance $ 19,300.00 Retained Earnings: Beginning Balance $ - Add: Net Income $ 900.00 Ending Balance $ 900.00 Total Equity $ 20,200.00 Balance Sheet Assets Cash $ 4,450.00 Supplies $ 2,550.00 Accounts Receivable $ 550.00 Equipment $ 15,000.00 Total Assets $ 22,550.00 Liabilities and Equity Accounts Payable $ 2,350.00 Total Liabilities $ 2,350.00 Equity: Common Stock $ 19,300.00 Retained Earnings $ 900.00 Total Equity $ 20,200.00 Total Liabilities and Equity $ 22,550.00 No, profit of $ 900 does not represent cash. Income statement is prepared on the basis of accrual accounting principle. As per this concept, revenue earned and expenses incurred during the year is taken into account to compute net income rather than cash received or cash expended. Therefore, net income of $ 900 is a result of revenue earned and expenses incurred.

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Financial statements LOB CHECK FIGURE: All Omar, Capital, March 31, 2020 - $20

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Archived Solution

	Income statement

	Service Revenue	$ 1,150.00
Less:	Expenses:
	Advertising Expenses	$ 250.00
	Net Income	$ 900.00

	Statement of changes in equity

	Common Stock:
	Beginning Balance	$ -
Add:	Issued during the period	$ 19,300.00
	Ending Balance		$ 19,300.00

	Retained Earnings:
	Beginning Balance	$ -
Add:	Net Income	$ 900.00
	Ending Balance		$ 900.00
	Total Equity		$ 20,200.00

Balance Sheet
	Assets
Cash		$ 4,450.00
Supplies		$ 2,550.00
Accounts Receivable		$ 550.00
Equipment		$ 15,000.00
Total Assets		$ 22,550.00


	Liabilities and Equity

Accounts Payable		$ 2,350.00
Total Liabilities		$ 2,350.00
Equity:
Common Stock		$ 19,300.00
Retained Earnings		$ 900.00
Total Equity		$ 20,200.00
Total Liabilities and Equity		$ 22,550.00

No, profit of $ 900 does not represent cash. Income statement is prepared on
the basis of accrual accounting principle. As per this concept, revenue earned and
expenses incurred during the year is taken into account to compute net income rather
than cash received or cash expended. Therefore, net income of $ 900 is a result of
revenue earned and expenses incurred.