Travis McAllister operates a surveying company. For the first few months of the company?s life (through April), the accounting records were maintained by an outside bookkeeping service. According to those records, McAllister?s equity balance was $75,000 as of April 30. To save on expenses, McAllister decided to keep the records himself. He managed to record May?s transactions properly, but was a bit rusty when the time came to prepare the financial statements. His first versions of the balance sheet and income statement follow. McAllister is bothered that the company apparently operated at a loss during the month, even though he was very busy.

Required

Using the information contained in the original financial statements, prepare corrected statements, including a statement of changes in equity, for the month of May.

Analysis Component: The owner, Travis McAllister, made a withdrawal during May. Withdrawals cause equity to decrease. Why would the owner intentionally cause equity to decrease by making a withdrawal?

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McAllister Surveying Income Statement For Month Ended May 31, 2020 Revenue: $ 3,000 Investments by owner . Unearned surveying fees.. 6,000 $ 9,000 Total revenues. Operating expenses: $3,100 Rent expense. Telephone expense. 600 Surveying equipment. 5,400 3,200 Advertising expense Utilities expense.. 300 Insurance expense. 900 Withdrawals by owner. 6,000 Total operating expenses. 19,500 S(10,500) Profit (loss). McAllister Surveying Balance Sheet May 31, 2020 Assets Liabilities Cash. Accounts receivable. $ 3,900 $ 2,400 Accounts payable. Surveying fees earned. 2,700 18,000 Prepaid insurance. 1,800 Short-term notes payable. 48,000 Prepaid rent. Office supplies. Buildings Land. $ 68,400 4,200 Total liabilities. 300 Equity 81,000 36,000 Travis McAllister, capital. 64,500 Salaries expense 3,000 Total assets $132,900 Total liabilities and equity $132,900