The completed worksheet for Chavarria Corporation as of December 31, 20X1, after the company had completed the first month of operation, appears below.

INSTRUCTIONS
1. Prepare an income statement.
2. Prepare a statement of owner’s equity. The owner made no additional investments during the month.
3. Prepare a balance sheet (use the report form).
Analyze: 

If the adjustment to Prepaid Advertising had been $6,800 instead of $3,400, what net income would have resulted?

Transcribed Image Text:

ACCOUNT NAME Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Advertising 5 Equipment Accumulated Depreciation-Equipment Accounts Payable 8 Isabel Chavarria, Capital 9 Isabel Chavarria, Drawing 10 Fees Income 11 Supplies Expense 12 Advertising Expense 13 Depreciation Expense-Equipment 14 Salaries Expense 15 Utilities Expense 16 Totals 17 Net Income 18 19 TRIAL BALANCE DEBIT 78 200 00 13 0 0 0 00 12 100 00 20 400 00 85 000 00 820000 17 800 00 280000 237 500 00 CREDIT 13 000 00 109 000 00 115 500 00 237 500 00 (a) (b) (c) Chavarria Corporation Worksheet Month Ended December 31, 20X1 DEBIT ADJUSTMENTS 7000 00 340000 1700 00 12 100 00 (a) (b) (c) CREDIT 700000 3400 00 1700 00 1210000