Appendix I
Review Exercise Solutions
401
Chapter 6 Review Exercise—Solutions
a) Prepare the income statement, statement of owner’s equity and the classified balance sheet.
CG Accounting
Statement of Owner's Equity
For the Month Ended June 30, 2016
Gordon, Capital at June 1
$6,400
Add:
Additional Investment
$3,000
Net Income
3,375 6,375
Subtotal
12,775
Less:
Gordon, Drawings
1,000
Gordon, Capital at June 30
$11,775
CG Accounting
Income Statement
For the Month Ended June 30, 2016
Service Revenue
$4,950
Expenses
Advertising Expense
$450
Depreciation Expense
100
Insurance Expense
100
Interest Expense
25
Rent Expense
900
Total Expenses
1,575
Net Income (Loss)
$3,375
CG Accounting
Classified Balance Sheet
As at June 30, 2016
Assets
Current Assets
Cash
$5,550
Accounts Receivable
5,500
Prepaid Insurance
1,100
Total Current Assets
$12,150
Property, Plant & Equipment
Equipment
6,000
Less: Accumulated Depreciation
(100)
Total Property, Plant & Equipment
5,900
Total Assets
$18,050
Liabilities
Current Liabilities
Accounts Payable
$2,750
Interest Payable
25
Unearned Revenue
450
Current Portion of Bank Loan
800
Total Current Liabilities
$4,025
Long-Term Liabilities
Long-Term Portion of Bank Loan
2,250
Total Long-Term Liabilities
2,250
Total Liabilities
6,275
Owner's Equity
Gordon, Capital
11,775
Total Owner's Equity
11,775
Total Liabilities and Owner's Equity
$18,050
