Directions: Be sure to make a copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English spelling and grammar. Sources must be cited in APA format. Your response should be a minimum of one (1) single-spaced page to a maximum of two (2) pages in length.
To complete Lesson 6, which completes the Introduction to Accounting course, you must complete a comprehensive problem that requires you to apply the accounting principles you have learned in Chapters 1 through 6 of your textbook. You must complete, on your own, an Income Statement, Statement of Owner's Equity, and Balance Sheet using the information provided below for Rya’s Planning Services. SEND YOUR SOLUTION TO ASHWORTH COLLEGE. You will then receive feedback on your work on this problem.
Cash $21,500
Accounts Receivable 17,500
Office Supplies 500
Equipment 15,000
Accounts Payable 9,750
Rya Page, Capital 28,200
Rya Page, Drawing 5,000
Planning Fees Income 26,250
Office Supplies Expense 200
Rent Expense 800
Salaries Expense 3,000
Utilities Expense 700
This assignment must be a neat, professional presentation. Proper punctuation, spelling, and usage of grammar are imperative.
To complete the comprehensive problem for Rya's Planning Services, you will need to prepare an Income Statement, a Statement of Owner's Equity, and a Balance Sheet. These financial statements will help you analyze the financial performance and position of the company.
Before creating the financial statements, it is important to understand the purpose and content of each statement.
The Income Statement shows the revenue earned and the expenses incurred during a specific period. It helps determine the company's profitability by calculating the net income or net loss. The Income Statement includes revenues, expenses, and the resulting net income or net loss.
The Statement of Owner's Equity summarizes the changes in the equity section of the balance sheet. It shows the beginning and ending capital, any additional investments made by the owner, any drawings taken by the owner, and the net income or net loss for the period.
The Balance Sheet provides a snapshot of the company's financial position at a specific point in time. It lists the company's assets, liabilities, and owner's equity. The balance sheet must follow the accounting equation (Assets = Liabilities + Owner's Equity), and it must balance.
To solve the comprehensive problem for Rya's Planning Services, you will need to use the information provided in the question. Here is a step-by-step guide on how to prepare each statement:
1. Income Statement:
- List the revenues: Planning Fees Income ($26,250).
- List the expenses: Office Supplies Expense ($200), Rent Expense ($800), Salaries Expense ($3,000), and Utilities Expense ($700).
- Calculate the total revenues and total expenses.
- Subtract the total expenses from the total revenues to determine the net income or net loss.
2. Statement of Owner's Equity:
- Begin with the starting capital: Rya Page, Capital ($28,200).
- Add any additional investments made by the owner.
- Subtract any drawings taken by the owner.
- Add the net income or subtract the net loss from the Income Statement to determine the ending capital.
3. Balance Sheet:
- List the assets: Cash ($21,500), Accounts Receivable ($17,500), Office Supplies ($500), and Equipment ($15,000).
- List the liabilities: Accounts Payable ($9,750).
- Calculate the total assets and total liabilities.
- Calculate the owner's equity by subtracting liabilities from total assets.
- Use the ending capital from the Statement of Owner's Equity to determine the final owner's equity.
- Ensure that the assets equal the liabilities plus owner's equity to balance the balance sheet.
When creating your financial statements, it is essential to present them in a neat and professional format. Use proper punctuation, spelling, and grammar to ensure clarity and professionalism in your work.
For citing your sources, you will need to format them according to APA style. When referring to your textbook or any external resources, include the author(s), year of publication, title of the source, and publication information, if available.
Remember to make a copy of your answer before submitting it to Ashworth College for grading. Good luck!