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, 2021, and the revenues, expenses, and drawings for the year ended December 31, 2021:

Jim?s capital at the beginning of 2021 was $45,850. He made no investments during the year.

InstructionsPrepare 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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Operating expenses Prepaid insurance Salaries expense Service revenue 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 $ 3,545 1,685 88,230 153,750 595 20,095 Supplies expense Unearned revenue Vehicles 15,000 42,000