Asked by Ericka Pearce on May 17, 2024
Verified
An analysis of the transactions made by Dewey Cheatem & Co. a law firm for the month of July is shown below. Each increase and decrease in owner's equity is explained.
Instructions
(a) Prepare an income statement for the month ending July 31 2016.
(b) Prepare an owner's equity statement for the month ending July 31 2016.
Income Statement
Also known as profit and loss statement, it details a company’s financial performance, including sales, expenses, and profits over a period.
Owner's Equity Statement
An owner's equity statement is a financial document that shows changes in the equity of a company's owners over a period.
- Compute the net income, final owner's equity, and aggregate assets employing the provided information.
- Compute the annual consumption of supplies, aggregate expenditures, revenue from services, and the balance of owner's equity.
Verified Answer
MD
Michael DhaliwalMay 19, 2024
Final Answer :
(a)
DEWEY, CHEA TEM & CO.Income Statement For the Month Ended July 31, 2016 Revenues Service revenue $10,000 Expenses Salaries and wages expense $4,500 Rent expense 750 Utilities expense400‾ Total expenses5,650‾ Net income $4,350‾\begin{array}{c} \text { DEWEY, CHEA TEM \& CO.}\\ \text {Income Statement}\\ \text { For the Month Ended July 31, 2016}\\\\ \begin{array}{lrr} \text { Revenues } &\\ \text { Service revenue } &&\$10,000\\ \text { Expenses } &\\ \text { Salaries and wages expense } &\$4,500\\ \text { Rent expense } &750\\ \text { Utilities expense} &\underline{400}\\ \text { Total expenses} &&\underline{5,650}\\ \text { Net income } &&\underline{\$4,350}\\\end{array} \end{array} DEWEY, CHEA TEM & CO.Income Statement For the Month Ended July 31, 2016 Revenues Service revenue Expenses Salaries and wages expense Rent expense Utilities expense Total expenses Net income $4,500750400$10,0005,650$4,350
(b)
DEWEY, CHEA TEM & CO. Owner’s Equity Statement For the Month Ended July 31, 2016 Owner’s Capital, July 10 Add: Investments$15,000Net income 4,350‾19,350‾19,350 Less: Drawings 2,300‾Owner’s Canital July 31 $17,050\begin{array}{c} \text { DEWEY, CHEA TEM \& CO.}\\ \text { Owner's Equity Statement}\\ \text { For the Month Ended July 31, 2016}\\\\\begin{array}{lrr} \text { Owner's Capital, July 1} &&0\\ \text { Add: Investments} &\$15,000\\ \text {Net income } &\underline{4,350}&\underline{19,350}\\&&19,350\\ \text { Less: Drawings } &&\underline{2,300}\\ \text {Owner's Canital July 31 } &&\$17,050\\\end{array}\end{array} DEWEY, CHEA TEM & CO. Owner’s Equity Statement For the Month Ended July 31, 2016 Owner’s Capital, July 1 Add: InvestmentsNet income Less: Drawings Owner’s Canital July 31 $15,0004,350019,35019,3502,300$17,050
DEWEY, CHEA TEM & CO.Income Statement For the Month Ended July 31, 2016 Revenues Service revenue $10,000 Expenses Salaries and wages expense $4,500 Rent expense 750 Utilities expense400‾ Total expenses5,650‾ Net income $4,350‾\begin{array}{c} \text { DEWEY, CHEA TEM \& CO.}\\ \text {Income Statement}\\ \text { For the Month Ended July 31, 2016}\\\\ \begin{array}{lrr} \text { Revenues } &\\ \text { Service revenue } &&\$10,000\\ \text { Expenses } &\\ \text { Salaries and wages expense } &\$4,500\\ \text { Rent expense } &750\\ \text { Utilities expense} &\underline{400}\\ \text { Total expenses} &&\underline{5,650}\\ \text { Net income } &&\underline{\$4,350}\\\end{array} \end{array} DEWEY, CHEA TEM & CO.Income Statement For the Month Ended July 31, 2016 Revenues Service revenue Expenses Salaries and wages expense Rent expense Utilities expense Total expenses Net income $4,500750400$10,0005,650$4,350
(b)
DEWEY, CHEA TEM & CO. Owner’s Equity Statement For the Month Ended July 31, 2016 Owner’s Capital, July 10 Add: Investments$15,000Net income 4,350‾19,350‾19,350 Less: Drawings 2,300‾Owner’s Canital July 31 $17,050\begin{array}{c} \text { DEWEY, CHEA TEM \& CO.}\\ \text { Owner's Equity Statement}\\ \text { For the Month Ended July 31, 2016}\\\\\begin{array}{lrr} \text { Owner's Capital, July 1} &&0\\ \text { Add: Investments} &\$15,000\\ \text {Net income } &\underline{4,350}&\underline{19,350}\\&&19,350\\ \text { Less: Drawings } &&\underline{2,300}\\ \text {Owner's Canital July 31 } &&\$17,050\\\end{array}\end{array} DEWEY, CHEA TEM & CO. Owner’s Equity Statement For the Month Ended July 31, 2016 Owner’s Capital, July 1 Add: InvestmentsNet income Less: Drawings Owner’s Canital July 31 $15,0004,350019,35019,3502,300$17,050
Learning Objectives
- Compute the net income, final owner's equity, and aggregate assets employing the provided information.
- Compute the annual consumption of supplies, aggregate expenditures, revenue from services, and the balance of owner's equity.