Answer:
Requirement 1. Prepare the income statement for the month ended July 31, 2018.
Sandra Sousa, Registered Dietitian
Income Statement
For the Month Ended July 31, 2018
Service Revenue $11,258
Salaries Expense -$1,500
Rent Expense -$1,200
Utilities Expense -$350
Net income $8,208
Requirement 2. Prepare the statement of owners equity for the month ended July 31, 2018.
Sandra Sousa, Registered Dietitian
Statement of Owner's Equity
For the Month Ended July 31, 2018
Sousa, Capital balance July 1, 2018 $22,000
Investment during month $0
<u>Net income $8,208</u>
subtotal $30,208
<u>Withdrawals during the month -$2,000</u>
Sousa, Capital balance July 31, 2018 $28,208
Requirement 3. Prepare the balance sheet &s of July 31, 2018.
Sandra Sousa, Registered Dietitian
Balance Sheet
For the Month Ended July 31, 2018
Assets:
Cash $33,000
Accounts Receivable $9,600
Office Supplies $2,200
Prepaid Insurance $2,800
Equipment $18,000
Total assets $65,600
Liabilities and equity:
Accounts Payable $3,100
Unearned Revenue $292
Notes Payable $34,000
Sousa, Capital $22,000
Retained earnings $6,208
Total liabilities and equity $65,600
Requirement 4. Calculate the debt ratio as of July 31, 2018.
debt ratio = liabilities / assets = $65,600 / $37,392 = 175.44%
debt to equity ratio = liabilities / equity = $37,392 / $28,208 = 132.56%
