Travis McAllister operates a surveying company. For the first few months of the company?s life (through April),
Question:
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?
Step by Step Answer:
Fundamental Accounting Principles Volume I
ISBN: 978-1260305821
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann