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Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 12 Chapter 1 Introduction to Accounting and Business Assets Cash + Supplies + Land 1,350 20,000 Bal. 5,000 d. +7,500 Bal. 12,500 1,350 20,000 5 = Liabilities 1 Owner’s Equity Accounts Chris Clark, Fees Payable + Capital + Earned 1,350 25,000 +7,500 1,350 25,000 7,500 Different terms are used for the various types of revenues.
3,650 Bal. 8,850 1,350 20,000 5 Liabilities 1 = Owner’s Equity Accounts Chris Clark, Fees Wages Payable + Capital + Earned – Exp. – 1,350 25,000 7,500 –2,125 –2,125 1,350 25,000 7,500 Rent Utilities Misc. Exp. – Exp. – Exp. –800 –800 –450 –450 –275 –275 Businesses usually record each revenue and expense transaction as it occurs. However, to simplify, NetSolutions’ revenues and expenses are summarized for the month in transactions (d) and (e). Transaction F Nov. 30, 2013 NetSolutions paid creditors on account, $950.
Net income . . . . . . . . . . . . . . . $263,200 $131,700 63,000 12,950 207,650 $ 55,550 Practice Exercises: PE 1-4A, PE 1-4B Statement of Owner’s Equity The statement of owner’s equity reports the changes in the owner’s equity for a period of time. It is prepared after the income statement because the net income or net loss for the period must be reported in this statement. Similarly, it is prepared before the balance sheet, since the amount of owner’s equity at the end of the period must be reported on the balance sheet.