Answer:
Capital $ 18,000
Retained Earnings $ 1,850
TOTAL EQUITY $ 19,850
First we need to work on the balance sheets, separating each part of it with the correspondent balance.
As you can see, to equilibrate the accounting equation Assets= Equity + Liabilities it's necessary to elaborate the income statement to complete the Retained Earnings of the month.
As you have the Income statement of the Month then the total amount that S. Jones take from the company must be deducted so we have the retained earnings that meets with the accounting equation.
Explanation:
BALANCE SHEETS May
Cash $ 12,000
Accounts Receivable $ 16,000
Office Supplies $ 0,350
TOTAL CURRENT ASSETS $ 28,350
Equipment $ 16,500
TOTAL NONCURRENT ASSETS $ 16,500
TOTAL ASSETS $ 44,850
Accounts Payable $ 12,000
Notes Payable $ 13,000
TOTAL CURRENT LIABILITIES $ 25,000
TOTAL NONCURRENT LIABILITIES $ 0,000
TOTAL LIABILITIES $ 25,000
Capital $ 18,000
Retained Earnings $ 1,850
TOTAL EQUITY $ 19,850
Income Statement May
Service Revenue $ 6,000
Telephone Expense -$ 0,350
Rent Expense -$ 1,100
Advertising Expense -$ 2,150
Income $ 2,400
S. Jones, Drawing -$ 0,550
Retained Earnings $ 1,850
