Critical Thinking Problem $3\mathrm{.}1($Algo$)$ Financial Condition LO $3-1,3-4,3-6$

At the beginning of the summer, Humphrey Nelson was looking for a way to earn money to pay for his college tultion In the fall. He

declded to start a lawn service business in his nelghborhood. To get the business started, Humphrey used $$6,400$ from his savings

account to open a checking account for his new business, Elegant Lawn Care. He purchased two used power mowers and varlous

lawn care tools for $$2,000,$ and pald $$3,600$ for a used truck to transport the mowers.

Several of his nelghbors hired him to cut thelr grass on a weekly basls. He sent these customers monthly bills. By the end of the

summer, they had pald him $$5,200$ In cash and owed hlm another $$2,600.$ Humphrey also cut grass on an as$-$heeded basls for other

nelghbors, who pald him $$4,400.$

During the summer, Humphrey spent $$1,000$ for gasoline for the truck and mowers. He pald $$4,200$ to a frlend who helped him on

several occasions. An advertisement in the local paper cost $$1,000.$ Now, at the end of the summer, Humphrey Is concerned because

he has only $$4,200$ left in hls checking account. He says, "I worked hard all summer and have only $$4,200$ to show for It$.$ It would have

been better to leave the money in the bank."

Required:

Prepare an Income statement, a statement of owner's equity $($for the three month perlod ended August $31,20$X$1),$ and a balance sheet

$($dated August $31,20$X$1)$ for Elegant Lawn Care.

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