Preparing: An Income Statement, Owner's Equity Statement and Balance Sheet
Not what you're looking for?
Doug Maltbee formed a lawn service business as a summer job. To start the business on May 1, he deposited $1,000 in a new bank account in the name of the proprietorship. The $1,000 consisted of a $600 loan from his father and $400 of his own money. Doug rented lawn equipment, purchased supplies, and hired fellow students to mow and trim his customer's lawns.
At the end of each month, Doug mailed bills to his customers. On August 31, he was ready to dissolve the business and return to Louisiana State University for the fall semester. Because he was so busy, he kept few records other than his checkbook and a list of amounts owed to him by customers.
On August 31, Doug's checkbook shows a balance of $690, and his customers still owed him $500. During the summer, he collected $4,250 from customers. His checkbook listed payments for supplies totaling $400, and he still has gasoline, a weed eater cord, and other supplies that cost a total of $50. He paid his employees $1,900, and he still owes them $200 for the final week of the summer.
Doug rented some equipment from Scholes Machine Shop. On May 1, he signed a six-month lease on mowers and paid $600 for the full lease period. Scholes will refund the unused portion of the prepayment if the equipment is in good shape. To get the refund, Doug has kept the mower in excellent condition. In fact, he had to pay $300 to repair a mower.
To transport employees and equipment to jobs, Doug used a trailer that he bought for $300. He figures that the summer's work used up one-third of the trailer's service potential. The business checkbook lists a payment of $460 for cash withdrawals by Doug during the summer. Doug paid his father back during August.
As a team, prepare the income statement of Maltbee Lawn Service for the four months May through August. Prepare the classified balance sheet of Maltbee Lawn Service at August 31.
Was Maltbee's summer work successful? Give the reason for your answer. What are the steps in the accounting cycle?
Purchase this Solution
Solution Summary
This solution is comprised of a complete and neat response, which illustrates how to create an income statement, which is enclosed within the attached Word document and a concluding comment on the success of the business.
Solution Preview
Please view the attached document for a properly formatted income statement.
Prepare an Income Statement, Owner's Equity Statement, and Balance Sheet.
Maltbee Lawn Service
Income Statement
For the Month Ending August 31, 20XX
Revenue (4,250 + 500) 4,750
Less: Supplies Expense (400 - 50) 350
Salaries Expense (1,900 + 200) ...
Purchase this Solution
Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.