Chapter 1, Problem 1.3AP

(a)

To determine

Financial Statements: The statement prepared for the specific period which comprises the financial information of the organization. It includes a statement of income which shows the profitability of the business, balance sheet which shows the financial position in the terms of assets, liabilities, and capital, and cash flow statement which represents the cash flows for the accounting period.

Income Statement: Income Statement is a periodical statement prepared to show the profitability of the business conducted for a particular period. It records all expenses, losses, incomes, and gains related to a particular period. Expenses and losses are debited in the income statement. Incomes and gains are credited to the Income Statement.

Statement of owner’s equity: It is a statement which records the changes in the stockholder’s equity during an accounting period. It includes the amount due in the capital account, the balance of reserves and surplus, additional capital raised and the amount withdrawn. Changes in the amount of net income also affect the balances in stockholder’s equity.

Balance Sheet: Balance Sheet is a financial position statement classified into organization’s assets, stockholder’s equity and other liabilities at a particular date. One side is Organization’s assets and another side is stockholder’s equity and other liabilities. Both the sides should be balanced to each other.

To prepare: The statement of income, statement of owner’s equity and balance sheet of Company D for the month of June.

(b)

To determine

To prepare: The statement of income, statement of owner’s equity and balance sheet of Company D for the month of June if  (1) services performed $900, but unbilled and uncollected, and (2) if outstanding gasoline expense of $150