Exercise 1

CARLA QUENTIN
Income Statement
For the Month Ended May 31, 2012
_____________________________________________________________________________________
Revenues
Service revenue ..................................................................
$9,400
Expenses
Rent expense.......................................................................
$900
Advertising expense............................................................
125
Salaries expense ................................................................
2,500
Utilities expense .................................................................
275
Total expenses ...............................................................
3,800
Net income ....................................................................
$5,600
CARLA QUENTIN
Owner's Equity Statement
For the Month Ended May 31, 2012
CARLA QUENTIN, Capital, May 1 ..............................................
Add: New Investment...............................................................
Add: Net income ......................................................................
Less: Drawings .........................................................................
Carl Craft, Capital, May 31 .......................................................

$0
7,000
5,600
12,600
1,000
$11,600

CARLA QUENTIN
Balance Sheet
As of May 31, 2012
_____________________________________________________________________________________
Assets
Cash .......................................................................................
Accounts receivable .................................................................
Supplies ...................................................................................
Equipment ...............................................................................
Total assets .........................................................................
Liabilities and Owner's Equity
Liabilities
Notes payable.....................................................................
Accounts payable ...............................................................
Owner's Equity
CARLA QUENTIN, Capital ....................................................
Total liabilities and owner's equity ......................................

$ 14,600
1,400
600
4,200
$20,800

$5,000
$ 4,200
11,600
$20,800

CARLA QUENTIN
Statement of Cash Flows
For the Month Ended May 31, 2012
Cash flows from operating activities
Cash receipts from revenues
Cash payments for expenses (including Supplies)
Net cash provided by operating activities
$3,600
Cash flows from investing activities
Purchase of equipment (not paid in cash)
($0)
Cash flows from financing activities
Investments by owner
Borrowing from Bank
Drawings by owner
$11,000
Net cash provided by financing activities
Net increase in cash
$14,600
Cash at the beginning of the period
$0
Cash at the end of the period
$14,600

$ 8,000
(4,400)

($0)

$7,000
5,000
(1,000)

Exercise 2: Missing figure solution.

a)

Assets = Liabilities + Owners Equity

95,000 = 50,000+ Owners Equity
Owners Equity = 95,000-50,000 = 45,000

b)

Assets = Liabilities + Owners Equity

Assets = 55,000 + 60,000= 115,000

c) Beginning Owners equity + New Investment+ Revenue

Expenses Drawing
= Ending Owners equity
So, Additional Investment =
Ending Owners equity - Beginning Owners equity Revenue +Expenses + Drawing
Just think about the statement of owners equity:
Beginning Owners equity
45,000
+ Additional Investment
?
+ Revenue
Expenses
Drawing
Ending Owners equity
60,000

xxxx
xxxx
xxxx
xxxx
xxxx
xxxx

350,000
320,000
25,000

So, Additional Investment = 60,000 45,000 350,000 +

320,000 + 25,000 = 10,000.

Do the rest by following the same procedure.

Ans:
Sajuki Company
Balance Sheet
December 31, 2012
Assets:
Cash
Accounts Receivables
Supplies
Equipment
Total Assets

$15,000
9,500
8,000
46,000
$78,500

Total Liabilities:
Accounts Payable
$21,000
Oweners Equity:
Owners Capital
57,500*
Total Liabilities and Owners Equity $78,500

(Capital Drawing = 67,500-10000)