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Chapter05 - 5-1 Chapter 5 The Accounting Cycle Reporting...

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BUSI1002KLT, 07/08 5-1 The Accounting Cycle Reporting Financial Results Chapter 5
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BUSI1002KLT, 07/08 5-2 Learning Objective LO1 To prepare an income statement, a statement of retained earnings, and a balance sheet.
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BUSI1002KLT, 07/08 5-3 JJ's Lawn Care Service Adjusted Trial Balance May 31, 2007 Cash 3,925 $ Accounts receivable 75 Tools & equipment 2,650 Accumulated depreciation: tools & equipment 50 $ Truck 15,000 Accumumlated depreciation: truck 250 Notes payable 13,000 Accounts payable 150 Capital stock 8,000 Dividends 200 Sales revenue 750 Gasoline expense 50 Depreciation expense: tools & equipment 50 Depreciation expense: truck 250 Total 22,200 $ 22,200 $ This is the Adjusted Trial Balance for JJ’s. Now, let’s prepare the financial statements for JJ’s Lawn Care Service for May.
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BUSI1002KLT, 07/08 5-4 JJ's Lawn Care Service Income Statement For the month ending May 31, 2007 Sales revenue 750 $ Operating expenses: Gasoline expense 50 $ Depreciation: tools & equipment 50 Depreciation: truck 250 350 Net income 400 $ Net income also appears on the Statement of Retained Earnings .
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BUSI1002KLT, 07/08 5-5 Business Earnings Dividends Business Losses This statement summarizes the increases and decreases in Retained Earnings during the period. Statement of Retained Earnings
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BUSI1002KLT, 07/08 5-6 Now, let’s prepare the Balance Sheet.
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BUSI1002KLT, 07/08 5-7 JJ's Lawn Care Service Balance Sheet May 31, 2007 Assets Cash 3,925 $ Accounts receivable 75 Tools & equipment 2,650 $ Less: Accumulated depreciation 50 2,600 Truck 15,000 $ Less: Accumulated depreciation 250 14,750 Total assets 21,350 $ Liabilities & Stockholders' Equity Liabilities: Notes payable 13,000 $ Accounts payable 150 Total liabilities 13,150 $ Stockholders' equity: Capital stock 8,000 $ Retained earnings 200 Total stockholders' equity 8,200 Total liabilities & stockholders' equity 21,350 $
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BUSI1002KLT, 07/08 5-8 Learning Objective LO2 To explain how the income statement and the statement of retained earnings relate to the balance sheet.
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BUSI1002KLT, 07/08 5-9 Preparing Financial Statements JJ's Lawn Care Service Income Statement For the month ending May 31, 2007 Sales revenue 750 $ Operating expenses: Gasoline expense 50 $ Depreciation: tools & equipment 50 Depreciation: truck 250 350 Net income 400 $ JJ's Lawn Care Service Balance Sheet May 31, 2007 Assets Cash 3,925 $ Accounts receivable 75 Tools & equipment 2,650 $ Less: Accumulated depreciation 50 2,600 Truck 15,000 $ Less: Accumulated depreciation 250 14,750 Total assets 21,350 $ Liabilities & Stockholders' Equity Liabilities: Notes payable 13,000 $ Accounts payable 150 Total liabilities 13,150 $ Stockholders' equity: Capital stock 8,000 $ Retained earnings 200 Total stockholders' equity 8,200 Total liabilities & stockholders' equity 21,350 $
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BUSI1002KLT, 07/08 5-10 Learning Objective LO3 To explain the concept of adequate disclosure.
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BUSI1002KLT, 07/08 5-11 Notes to the
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