Income Statement
Income statement contains the information of a business operating within a given period. It gives information on the financial transactions within a given financial period. S Jones’s income statement for the month may contain transactions including the revenue and accounts payables and the net income of the moth may. According to the financial statement presented below, the net income after all deductions is $5,750
The income statement for the month May 2018
Table 1 S Jones’s income statement for May
| REVENUE | |
| Cash | $12,000 |
| Accounts Receivables | $16,000 |
| Supplies | $350 |
| Service Revenue | $6,000 |
| Total Revenue | $34,350 |
| Expenses | |
| Notes Payable | $13,000 |
| Accounts Payable | $12,000 |
| Telephone Expenses | $350 |
| Rent Expense | $1,100 |
| Advertising Expenses | $2150 |
| Tax | 0 |
| Total Expenses | $28,600 |
| Net Income | $5,750 |
Statement of owner’s equity as of May 2018
The owner’s equity statement provides information on the amount the business owner or stakeholder has in the business after withdrawals. This information contains the input and drawings transacted by the business owner. In May, Jones begun with equipment worth $16,000 in assets, invested $18000 in cash. In the same month, he made an income of $15,700 as indicated in the income statement and made a drawing of $550. The subtraction of the drawings from the summation of the assets invested money, and the income provides the statement of owner’s equity as performed in the table below.
Table 2 statement of owner’s equity
| Description | Amount |
| Equipment | $16,000 |
| S Jones Capital | $18,000 |
| Income | $5,750 |
| Total Starting Capital | $39,750 |
| S Jones Drawings | $550 |
| Total | $39,200 |
Balance sheet
A balance sheet is an instrumental tool in determining whether a business is running its operations on debts or it is stable and capable to fund its operations.
| May 2018 | |
| Assets | |
| Current Assets | |
| Cash | $12,000 |
| Accounts Receivables | $16000 |
| Equipment | $16,500 |
| Supplies | $350 |
| Service Revenue | $6000 |
| Total Assets | $50,850 |
| Liabilities And Equity | |
| Equity | $39,200 |
| Liabilities | |
| Rent | $1100 |
| Advertising | $2150 |
| Telephone | $350 |
| Note Payable | $13000 |
| Total | $55,800 |
From this balance sheet, the total amount of liabilities and equity is greater than the total asset, which indicates that the Jones’s business is running on debt and can require external funding such as a loan.