Income statement/Classified balance sheet
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Need help in preparing an income statement for Doug's Lawn Service for the four months May through August, 200_. I then need to prepare the classified balance sheet of Doug's Lawn Service at August 31. I need to find out if the summer work business was successful? and wat was the net income? Please include any calculations that may have been used.
He , has come to me for help in dissolving the lawn service business he operated while he was home from college over the summer. When he started the business on May 1, Doug deposited $1,000 in a new bank account in the name of the proprietorship (Doug's Lawn Service). 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 Purdue 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.
At August 31, Doug's checkbook shows a balance of $690. His customers still owe him $500. During the summer, he collected $4,250 from customers. His checkbook lists payments for supplies totaling $400; he still has gasoline, weed eater cord, and other supplies that cost a total of $50. He paid his employees $1,900, and still owes them $200 for the final week of the summer.
Doug rented some equipment from Ace Rental. On May 1, he signed a six-month lease on mowers and paid $600 for the full lease period. Ace will refund the unused potion of the prepayment if the equipment is in good shape. In order to get the refund, Doug has kept the mower in excellent condition. In fact, he had to pay $300 to repair a mower.
Doug purchased a trailer for $300 to transport his equipment to jobs. He figures that the summer's work used up one-third of the trailer's service potential.
The business checkbook lists a payments of $460 for cash withdrawals by Doug during the summer. Doug paid his father back during August.
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Solution Summary
The solution explains how to prepare an income statement and the classified balance sheet for Doug's Lawn Service.
Solution Preview
First let us make the income statement.
From the details provided, the revenues were 4,250+500=4,750 ( he collected 4,250 and 500 is still to be collected). The expenses were -
Supplies 350 - he purchased for 400 and still has 50 left
Wages - 1,900+200= 2,100 ( 200 is still to be paid)
Equipment rental 400 - 600 for six months and it is used for 4 months
Trailer Depreciation 100 - one third has been used up.
Repairs - 300
The income statement ...
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