The Ultra Services Company is a financial planning services firm owned and operated by Chad Tillman. As of July 31, 2008, the end of the current fiscal year, the accountant for The Ultra Services Company prepared an end-of-period spreadsheet (work sheet), part of which is shown at the top of the next page.
Instructions
1. Prepare an income statement, a statement of owner’s equity (no additional investments were made during the year), and a balance sheet.
2. Journalize the entries that were required to close the accounts at July 31.
3. If the balance of Chad Tillman, Capital decreased $40,000 after the closing entries were posted, and the withdrawals remained the same, what was the amount of net income or net loss?
The Ultra Services Company End-of-Period Spreadsheet (Work Sheet)
For the Year Ended July 31, 2008
Income Statement
Balance Sheet
Cash
13,950
Accounts Receivable
41,880
Supplies
8,400
Prepaid Insurance
7,500
Land
180,000
Buildings
360,000
Accumulated Depreciation—Buildings
217,200
Equipment
258,270
Accumulated Depreciation—Equipment
122,700
Accounts Payable
33,300
Salaries Payable
3,300
Unearned Rent
1,500
Chad Tillman, Capital
340,500
Chad Tillman, Drawing
30,000
Service Fees
525,000
Rent Revenue
4,500
Salary Expense
219,000
Depreciation Expense—Equipment
28,500
Rent Expense
25,500
Supplies Expense
22,950
Utilities Expense
15,900
Depreciation Expense—Buildings
15,600
Repairs Expense
12,450
Insurance Expense
3,000
Miscellaneous Expense
5,100
348,000
529,500
900,000
718,500
Net income
181,500
181,500
529,500
529,500
900,000
900,000
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