Answer:
Net Income for the year ended December 31, 2017
Consulting revenue 33,000
Rental revenue 22,000
Total Revenues 55,0000
Salaries expense (20,000)
Rent expense (12,000)
S&A expenses (8,000)
Net Income 15,000
Statement of RE
net income 15,000
withdrawals (13,000)
ending retained earnings 2,000
Balance Sheet
Cash 10,000 Accounts payable 23,000
A/R 9,000 A. Armani, Capital, Dec. 31, 2016 7,000
Supplies 6,000
Equipment 5,000
Total Assets: 30,0000 Total liab + Equity 30,000
owner's equity:
Armani Capital Retained Earings Total
Balance Jan 1 4,000 0 4,000
Net Earnings 15,000 15,000
Withdrawals -13,000 -13,000
Contribution 1,000 1,000
Balance, Dec 31 5,000 2,000 7,000
Explanation:
First we do the net income which is revenues less expenses.
Then we proceed with the retained earnings, which si income less withdrawals
Finally the balance sheet we order the assets accoutn in the left and liabiltiies and equity on the right. They should always match as the balance sheet represent the accounting equation: A = L + E
For the owner's equity statement we most disclosure all changes in equity during the year.
