1. Ms. Labiba started her business (Labiba Car Repairing Shop) on December 1, 2020. During the first month of its operations, the business engaged in the following transactions: Date Transactions Dec 1 Dec 2 Invested cash $100,000 as initial capital to start the business. An amount of $36,000 was paid as advance rent for three months. Dec 3 Paid $60,000 cash on the purchase of equipment costing $80,000. The remaining amount was recognized as note payable. Dec 4 Purchased office supplies costing $17,600 on account. Dec 13 Provided services to its customers and received $28,500 in cash. Dec 13 Paid the accounts payable on the office supplies purchased on January 4. Dec 14 Paid wages to its employees for the month of January, aggregating $19,100. Dec 18 Provided $54,100 worth of services to its customers. They paid $32,900 and promised to pay the remaining amount in the next month. Dec 23 Received $15,300 from customers for the services provided on January 19. Dec 25 Received $4,000 as an advance payment from customers. Dec 26 Purchased office supplies costing $5,200 on account. Dec 28 Paid water bill of $19,000 for January Dec 31 Paid $5,000 advertising expense. Dec 31 Received electricity bill of $2,470 for January. Dec 31 Received telephone bill of $1,494 for January. Dec 31 Miscellaneous expenses paid during the month totaled $3,470.

d) Prepare an Income Statement and a classified Balance for Dec 31, 2020 based on the information available in the trial balance. (10)

c. Preparation of Trial Balance for December 31, 2020: Credit $ $ $ $ $ Debit 20,530.00 36,000.00 22,800.00 5,900.00 80,000.00 Account Title Cash Prepaid Rent Supplies Accounts Receivable Equipment Telephone Payable Electricity Payable Unearned Service Revenue Accounts Payable Notes Payable Labiba, Capital A A A A A A 1,494.00 2,470.00 4,000.00 5,200.00 20,000.00 100,000.00 82,600.00 Service Revenue Wages Expense Utilities Expense Advertising Expense Electricity Expense Telephone Expense Miscellaneous Expense Totals 4 4 4 4 4 44 $ 19,100.00 19,000.00 5,000.00 2,470.00 1,494.00 3,470.00 215,764.00 $ 215,764.00