Pavlov’s Home Renovations was started in 2008 by Jim Pavlov. Jim operates the business from an office in his home. Listed below, in alphabetical order, are the company’s assets and liabilities as at December 31, 2024, and the revenues, expenses, and drawings for the year ended December 31, 2024:

Jim’s capital at the beginning of 2024 was $45,850. He made no investments during the year.

Instructions
Prepare an income statement, statement of owner’s equity, and balance sheet.

Taking It Further

Why is it necessary to prepare the income statement first, then the statement of owner’s equity, and the balance sheet last?

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Accounts payable Accounts receivable Cash Equipment Insurance expense Interest expense J. Pavlov, drawings Notes payable $ 7,850 10,080 8,250 29,400 3,375 1,195 44,800 30,800 Operating expenses Prepaid insurance Salaries expense Service revenue Supplies Supplies expense Unearned revenue Vehicles $ 3,545 1,685 88,230 153,750 595 20,095 15,000 42,000