A sole proprietorship was started on January 1, Year 1, when it received $78,000 cash from Marlin Jones, the owner. During Year 1, the company earned $45,700 in cash revenues and paid $18,980 in cash expenses. Jones withdrew $6,500 cash from the business during Year 1. Required Prepare the income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows for Jones's Year 1 fiscal year.
A sole proprietorship was started on January 1, Year 1, when it received $78,000 cash from Marlin Jones, the owner. During Year 1, the company earned $45,700 in cash revenues and paid $18,980 in cash expenses. Jones withdrew $6,500 cash from the business during Year 1. Required Prepare the income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows for Jones's Year 1 fiscal year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A sole proprietorship was started on January 1, Year 1, when it received $78,000 cash from Marlin Jones, the owner. During Year 1, the
company earned $45,700 in cash revenues and paid $18,980 in cash expenses. Jones withdrew $6,500 cash from the business
during Year 1.
Required
Prepare the income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows for
Jones's Year 1 fiscal year.
Expert Solution
Step 1
Cash Balance = Capital introduced + Cash Revenue - Cash Expenses - Cash withdrawal
Cash Balance = $ 78,000 + $ 45,700 - $ 18,980 - $ 6,500
Cash Balance = $ 98,220
Jones, Capital (Ending Balance)
= Capital invested + Net Income - Cash Withdrawal
=$ 78,000 + ($ 45,700 - $ 18,980) - $ 6,500
= $ 98,220
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