On May 1, R. C. Twining started RC Flying School,

On May 1, R. C. Twining started RC Flying School, a company that provides flying lessons, by investing $40,000 cash in the business. Following are the assets and liabilities of the company on May 31, 2014, and the revenues and expenses for the month of May.

Cash ..................$ 3,400

Accounts Receivable ............. 4,900

Equipment ...............64,000

Notes Payable ...............30,000

Accounts Payable ............ 800

Service Revenue .............. 8,100

Advertising Expense ........... $ 600

Rent Expense ..............1,200

Maintenance and Repairs Expense ....... 400

Gasoline Expense ............. 2,500

Utilities Expense ............. 400


R. C. Twining made no additional investment in May, but he withdrew $1,500 in cash for personal use.


Instructions

(a) Prepare an income statement and owner’s equity statement for the month of May and a balance sheet at May 31.

(b) Prepare an income statement and owner’s equity statement for May assuming the following data are not included above: (1) $900 worth of services were performed and billed but not collected at May 31, and (2) $1,500 of gasoline expense was incurred but not paid.


Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

Members

  • Access to 2 Million+ Textbook solutions
  • Ask any question from 24/7 available
    Tutors
$9.99
VIEW SOLUTION

OR

Non-Members

Get help from Accounting Tutors
Ask questions directly from Qualified Online Accounting Tutors .
Best for online homework assistance.