The following equation shows the transactions of Cotton Cleaning Service during May. The business is owned by Taylor Cotton.
| Assets | = | Liab. | + | Owner’s Equity | ||||||||||||
| Cash | + | Accts. Rec. | + | Supp. | + | Equip. | = | Accts. Pay. | + | T.Cotton, Capital | + | Rev. | − | Exp. | ||
| Balances, May 1 | 14,600 | + | 2,600 | + | 5,400 | + | 33,400 | = | 6,600 | + | 49,400 | + | 0 | − | 0 | |
| Paid for utilities | − 940 | + 940 | ||||||||||||||
| New balances | 13,660 | + | 2,600 | + | 5,400 | + | 33,400 | = | 6,600 | + | 49,400 | + | 0 | − | 940 | |
| Sold services for cash | + 4,940 | + 4,940 | ||||||||||||||
| New balances | 18,600 | + | 2,600 | + | 5,400 | + | 33,400 | = | 6,600 | + | 49,400 | + | 4,940 | − | 940 | |
| Paid a creditor | − 1,900 | − 1,900 | ||||||||||||||
| New balances | 16,700 | + | 2,600 | + | 5,400 | + | 33,400 | = | 4,700 | + | 49,400 | + | 4,940 | − | 940 | |
| Sold services on credit | + 2,700 | + 2,700 | ||||||||||||||
| New balances | 16,700 | + | 5,300 | + | 5,400 | + | 33,400 | = | 4,700 | + | 49,400 | + | 7,640 | − | 940 | |
| Paid salaries | − 8,700 | + 8,700 | ||||||||||||||
| New balances | 8,000 | + | 5,300 | + | 5,400 | + | 33,400 | = | 4,700 | + | 49,400 | + | 7,640 | − | 9,640 | |
| Paid telephone bill | − 310 | + 310 | ||||||||||||||
| New balances | 7,690 | + | 5,300 | + | 5,400 | + | 33,400 | = | 4,700 | + | 49,400 | + | 7,640 | − | 9,950 | |
| Withdrew cash for personal expenses | − 2,600 | − 2,600 | ||||||||||||||
| New balances | 5,090 | + | 5,300 | + | 5,400 | + | 33,400 | = | 4,700 | + | 46,800 | + | 7,640 | − | 9,950 | |
Required: Analyze each transaction carefully. Prepare an income statement and a statement of owner’s equity for the month. Prepare a balance sheet for May 31, 2019.
