Barry Holk operates an engineering consulting business. Through the month of February, the accounting records for the business had been maintained by a CPA. Those records showed that Holk's February 28 capital balance was \(\$ 44,600\). However, Holk believed that the CPA had overcharged for his work in the past. As a result, Holk decided to keep his own records. At the end of March, he prepared the following statements shown below. He was shocked to discover how unprofitable his business had become, and asked you to review the statements. You should prepare new financial statements including a statement of changes in owner's equity.

Transcribed Image Text:

BARRY HOLK, CONSULTANT Income Statement For Month Ended March 31, 19- Revenue: Unearned consulting fees. Investments by owner Total revenue.. Operating expenses: Rent expense. Telephone expense Technical library Utilities expense Withdrawals by owner.. Travel and customer entertainment Insurance expense Total operating expenses Net income (loss).. $12,000 1,000 $13,000 $ 1,000 800 3,500 700 5,000 4,400 BARRY HOLK, CONSULTANT Balance Sheet March 31, 19- 200 15,600 $ (2,600) Assets Liabilities Cash. Accounts receivable. $ 5,600 Accounts payable. $ 1,400 8,800 Consulting fees earned 21,700 Prepaid rent 3,000 Notes payable 25,000 Prepaid insurance. 1,200 Total liabilities. $48,100 Office supplies 500 Land. 18,000 Buildings. 47,000 Owner's Equity Salaries payments. 6,000 Barry Holk, capital. 42,000 Total liabilities and owner's Total assets. $90,100 equity $90,100