Chapter 4, Problem 10QS

Preparing financial statements C2

Use the following adjusted trial balance of Sierra Company to prepare its (1) income statement and (2) statement of owner's equity for the year ended December 31. The H. Sierra, Capital account balance was $10.500 on December 31 of the prior year.

Account Title	Debit	Credit
Cash	$5,000
Prepaid insurance	500
Notes receivable {due in 5 years)	4,000
Buildings	20,000
Accumulated depreciation—Buildings		$12.0OO
Accounts payable		2,500
Motes payab e ;due n 3 yea'ii		3,000
H. Sierra, Capital		10,500
H. 5ierra, Withdrawals	1,000
Consulting revenue		9,500
Wages expense	3,500
Depreciation expense—Buildings	2,000
Insurance expense	1,500
Totals	$37,500	$37,500