Upon graduation from high school, William Nitter accepted a job as a plumber's assistant for a...

 

 

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Upon graduation from high school, William Nitter accepted a job as a plumber's assistant for a large local plumbing company. After three years of hard work, William received a plumbing licence and decided to start his own business. He had saved $40,000, which he invested in the business. His lawyer had advised him to start as a corporation. First, he transferred the $40,000 from his savings account to a business bank account for William's Plumbing Services Inc. and was issued shares. He then purchased a used panel truck for $26,000 cash and second-hand tools for $4,600, rented space in a small building, inserted an advertisement in the local paper, and opened his business on July 1, 2017. Immediately. William was very busy, after one month, he employed an assistant. Although William knew practically nothing about the financial side of the business, he realized that a number of reports were required and that expenses and collections from clients had to be controlled carefully. At December 31, 2017, prompted in part by concem about his income tax situation, William recognized the need for financial statements. His wife, Jennifer, developed some financial statements for the business. On December 31, 2017, with the help of a friend, she gathered the following data for the six months just ended. Bank account deposits of collections for plumbing services totalled $80,000. The following cheques had been written: plumber's assistant, $18,600; payroll taxes, $910; oll, gas, and maintenance for the truck, $3,200, rent, $3,300; supplies purchased and used on jobs, $18,700, utilities and telephone, $2,650; insurance, $1,020 for the past six months; and miscellaneous expenses (ncluding advertising), $1,540. Also, uncollected invoices to customers for plumbing services amounted to $7,600. The $660 rent for December had not been paid. William estimated the cost of using the truck and tools (depreciation) during the six months to be $4,000. The average income tax rate for income from his business is 30 percent. Required: 1. Prepare a statement of earnings for William's Plumbing Services Inc. for the six months of July through December 2017. Use the following main captions: Revenue from services, Expenses, Earnings before income taxes, and Not earnings. Expenses: WILLIAM'S PLUMBING SERVICES INC. Statement of Earnings For the Six Months Ended December 31, 2017 Assignment 1 Ⓒezto.mheducation.com/hm.tpx Required: 1. Prepare a statement of earnings for William's Plumbing Services Inc. for the six months of July through December 2017. Use the following main captions: Revenue from services, Expenses, Eamings before income taxes, and Net earnings. Expenses: WILLIAM'S PLUMBING SERVICES INC. Statement of Earnings For the Six Months Ended December 31, 2017 Total expenses, excluding income taxes Earnings before income taxes $ 0 0 0 6 Assignment 1 ezto.mheducation.com/hm.tpx 2. Prepare a statement of financial position for William's Plumbing Services Inc. as at December 31, 2017. WILLIAM'S PLUMBING SERVICES INC. Statement of Financial Position As at December 31, 2017 Assets Total assets Total liabilities Liabilities 3. Not available in Connect. Shareholders' Equity Total liabilities and shareholders' equity $ 0 0 0 0 0 6 Upon graduation from high school, William Nitter accepted a job as a plumber's assistant for a large local plumbing company. After three years of hard work, William received a plumbing licence and decided to start his own business. He had saved $40,000, which he invested in the business. His lawyer had advised him to start as a corporation. First, he transferred the $40,000 from his savings account to a business bank account for William's Plumbing Services Inc. and was issued shares. He then purchased a used panel truck for $26,000 cash and second-hand tools for $4,600, rented space in a small building, inserted an advertisement in the local paper, and opened his business on July 1, 2017. Immediately. William was very busy, after one month, he employed an assistant. Although William knew practically nothing about the financial side of the business, he realized that a number of reports were required and that expenses and collections from clients had to be controlled carefully. At December 31, 2017, prompted in part by concem about his income tax situation, William recognized the need for financial statements. His wife, Jennifer, developed some financial statements for the business. On December 31, 2017, with the help of a friend, she gathered the following data for the six months just ended. Bank account deposits of collections for plumbing services totalled $80,000. The following cheques had been written: plumber's assistant, $18,600; payroll taxes, $910; oll, gas, and maintenance for the truck, $3,200, rent, $3,300; supplies purchased and used on jobs, $18,700, utilities and telephone, $2,650; insurance, $1,020 for the past six months; and miscellaneous expenses (ncluding advertising), $1,540. Also, uncollected invoices to customers for plumbing services amounted to $7,600. The $660 rent for December had not been paid. William estimated the cost of using the truck and tools (depreciation) during the six months to be $4,000. The average income tax rate for income from his business is 30 percent. Required: 1. Prepare a statement of earnings for William's Plumbing Services Inc. for the six months of July through December 2017. Use the following main captions: Revenue from services, Expenses, Earnings before income taxes, and Not earnings. Expenses: WILLIAM'S PLUMBING SERVICES INC. Statement of Earnings For the Six Months Ended December 31, 2017 Assignment 1 Ⓒezto.mheducation.com/hm.tpx Required: 1. Prepare a statement of earnings for William's Plumbing Services Inc. for the six months of July through December 2017. Use the following main captions: Revenue from services, Expenses, Eamings before income taxes, and Net earnings. Expenses: WILLIAM'S PLUMBING SERVICES INC. Statement of Earnings For the Six Months Ended December 31, 2017 Total expenses, excluding income taxes Earnings before income taxes $ 0 0 0 6 Assignment 1 ezto.mheducation.com/hm.tpx 2. Prepare a statement of financial position for William's Plumbing Services Inc. as at December 31, 2017. WILLIAM'S PLUMBING SERVICES INC. Statement of Financial Position As at December 31, 2017 Assets Total assets Total liabilities Liabilities 3. Not available in Connect. Shareholders' Equity Total liabilities and shareholders' equity $ 0 0 0 0 0 6

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