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Financial Statements

The document provides information to prepare three key financial statements - the income statement, statement of changes in equity, and balance sheet - for Dilig's Self-Service Laundry for May 2019. The income statement shows a net income of $90,394. The statement of changes in equity shows an increase in Dilig's capital from $654,550 to $730,853 after accounting for net income and withdrawals. The balance sheet lists total assets of $838,723, total liabilities of $107,870, and owner's equity of $730,853 as of May 31, 2019.

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191 views2 pages

Financial Statements

The document provides information to prepare three key financial statements - the income statement, statement of changes in equity, and balance sheet - for Dilig's Self-Service Laundry for May 2019. The income statement shows a net income of $90,394. The statement of changes in equity shows an increase in Dilig's capital from $654,550 to $730,853 after accounting for net income and withdrawals. The balance sheet lists total assets of $838,723, total liabilities of $107,870, and owner's equity of $730,853 as of May 31, 2019.

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PREPARATION OF FINANCIAL STATEMENTS

ESSENCE OF FINANCIAL STATEMENTS


- The financial statements are the means by which the information accumulated and
processed in financial accounting is periodically communicated to the users. Without
accounting information embodied in the financial statements, users may not be able to arrive
at sound economic decisions.
- the objective of financial statements is to provide financial information about the reporting
entity's assets, liabilities, equity, income and expenses that is useful to users of financial statements
in assessing the prospects for future net cash inflows to the reporting entity and in assessing
management's stewardship of the entity's economic resources.

COMPLETE SET OF FINANCIAL STATEMENTS


1. Statement of financial performance or "Income Statement"
- This statement presents a summary of the revenues and expenses of an entity for the specific
period.

2. Statement of changes in equity


- This statement presents a summary of changes in capital such as investments, profit or loss
(computed from the income statement), and withdrawals during a specific period.

3. Statement of financial position or "Balance Sheet"


- This statement contains the list of the entity's assets, liabilities and equity (computed from the
statement of changes in equity) as at specific date.

ILLUSTRATION
Myra dilig recently established a business that will operate as Self-Service Laundry on May 2019.
Transactions during the month are already journalized and posted. Given below the Adjusted
Trial Balance for the month (assume the adjusting entries are already made).

Dilig's Self-Service Laundry


Adjusted Trial balance
May 31, 2019

Cash 582,862
Accounts Receivable 20,555
Prepaid Insurance 25,291
Laundry Supplies 36,452
Laundry Equipment 112,513
Accumulated Depreciation-Laundry Equipment 22,503
Computer Software 45,000
Accumulated Depreciation-Computer Software 9,000
Service Vehicle 59,441
Accumulated Depreciation-Service Vehicle 11,888
Accounts Payable 74,783
Notes Payable 33,087
Dilig, Capital 654,550
Dilig, Withdrawals 14,091
Service Revenue 142,876
Rent Expense 17,300
Advertising Expense 13,230
Salaries Expense 16,961
Utilities Expense 1,240
Telephone Expense 951
Miscellaneous Expense 2,800
948,687 948,687

Using the above informations, prepare the following set of financial statements:
Statement of financial performance or "Income Statement"
Statement of changes in equity
Statement of financial position or "Balance Sheet"

Page 1 of 2
FS-PREPARATION
1. Income Statement

Dilig's Self-Service Laundry


Income Statement
For the Month Ended May 31, 2019

Service Revenue 142,876


Less: Expenses
Rent Expense 17,300
Advertising Expense 13,230
Salaries Expense 16,961
Utilities Expense 1,240
Telephone Expense 951
Miscellaneous Expense 2,800 52,482
Net Income (Loss) 90,394

2. Statement of Changes in equity


\
Dilig's Self-Service Laundry
Statement of Changes in Equity
For the Month Ended May 31, 2019

Dilig, Capital, May 1, 2019 654,550


Add: Additional Investment -
Net Income 90,394
Total 744,944
Less: Dilig, Withdrawals (14,091)
Net Loss -
Dilig, Capital, May 31, 2019 730,853

3. Balance Sheet
Dilig's Self-Service Laundry
Balance Sheet
May 31, 2019

Assets
Current Assets
Cash 582,862
Accounts Receivable 20,555
Prepaid Insurance 25,291
Laundry Supplies 36,452
Total Current Assets 665,160
Non-Current Assets
Laundry Equipment 112,513
Accumulated Depreciation-Laundry Equipment (22,503) 90,010
Computer Software 45,000
Accumulated Depreciation-Computer Software (9,000) 36,000
Service Vehicle 59,441
Accumulated Depreciation-Service Vehicle (11,888) 47,553
Total Assets 838,723

Liabilities and Owner's Equity

Liabilities
Current Liabilities
Accounts Payable 74,783
Notes Payable 33,087
Total Liabilities 107,870
Owner's Equity
Dilig Capital, 5/31/2019 730,853
Total Liabilities and Owner's Equity 838,723

Page 2 of 2
FS-PREPARATION

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