Preparation and Interpretation of Financial Statements
Bachino's Pizza's accounts follow. The company has just completed its first year of operations ended September 30, 2014.
|
Accounts Payable
|
$ 21,000
|
|
Accounts Receivable
|
26,400
|
|
Cash
|
5,200
|
|
Delivery Truck Rent Expense
|
14,400
|
|
Equipment
|
12,600
|
|
Equipment Rental Expense
|
5,800
|
|
Marketing Expense
|
3,000
|
|
Owner's Capital
|
4,000*
|
|
Pizza Revenue
|
164,000
|
|
Salaries Expense
|
112,000
|
|
Salaries Payable
|
1,400
|
|
Supplies
|
800
|
|
Supplies Expense
|
8,200
|
|
Withdrawals
|
2,000
|
|
*Represents the initial investment by the owner.
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Required
1. Prepare Bachino's Pizza's income statement, statement of owner's equity, and balance sheet.
2. Why would Bachino's Pizza's owner set his business up as a sole proprietorship and not a partnership? Discuss how profits and obligations are shared in the two forms of business organizations.