balance sheet

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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.

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