Timothy Chang owns and operates Hard Copy Printers. A work sheet for the year ended December 31, 20-, is provided below. Chang made no additional investments during the year.

Prepare financial statements.

The income statement shows all the items of revenue and expense of the company during a given accounting period. This statement presents only temporary accounts. The difference between revenues and expenses will yield the net income or the net loss.Net income is earned when revenues are greater than expenses while net loss is incurred when expenses are greater than revenue. The total revenue is $35,100 whereas the total expenses are $26,305. The difference of $8,795 is the company's net income for the period.

The statement of owner's equity is a financial statement that shows the movement of the company's capital account within a specific duration. This section presents the beginning balance of the equity account, and shows thereafter all transactions which affect the equity account balance, which includes additional investments, withdrawals, the net income or loss for the period, and any other adjustments. For this company, beginning capital is $10,000, net income is $8,795 and withdrawals made is $13,000. No other transactions occurred during the period which could have affected the capital account. Thus, ending owner's equity is $5,795.

The balance sheet is a financial statement that shows the financial position of the company at a specific point in time, which is usually the last day of the accounting period. The statement shows the company's asset, liability, and equity accounts. Thus, the balance sheet only presents the company's real or permanent accounts. Total assets is $6,325, where $1,725 comprises current assets and $4,600 comprises noncurrent assets or the company's property, plant, and equipment. Total liabilities and owner's equity is also $6,325, where $530 is the company's liabilities which are all current and $5,795 is the company's equity. An item is current if it is expected to be settled/received within the company's normal operating cycle or 12 months from the close of the accounting period, whichever is longer.