Account Description Cash in Bank Cash in Bank Cash in Bank Cash in Bank Cash in Bank Cash in Bank Account

Receivables Prepaid Rent Prepaid Rent Prepaid Rent Office Supplies Office Supplies Office Supplies Equipment & Software Equipment & Software Accum.Depr. Equip. & Software Accum.Depr. Equip. & Software Account Payables Interest Payables Loan Maria Hernandes, Equity Subtotal B/S Revenue Rent Expense Rent Expense Utilities, Repairs, and Salaries Interest Expense Office Supplies Expense Depreciation Expense Depreciation Expense Subtotal P/L Total

Beginning Dr 12,000 Cr

Transactions/Adjustments Dr 40,000

7,000 6,000 3,000 5,000 900 27,000 11,000

20,000 30,000 50,000 50,000 61,900 3,000 3,000 33,000 200 800 1,500 306 50,000 50,000 41,806 103,706 5,194

Transactions/Adjustments Cr

Code a b.2 c.2 d e a c.1 c.2 b.1 b.2 e f g e h

Description Text Payment from clients for complete works Office supplies purchased during the period Rent expense Aug and prepaid rent for Sep 2004 Utilities, Repairs, and Salaries for the period Equip. & Software purchased on Aug 27, 2004 Works completed and delivered, but not paid yet Amortization for July 2004 Prepaid rent for September 2004 Office supplies used during the period Office supplies purchased during the period Equip. & Software purchased on Aug 27, 2004 Jul-Aug'04 Equip & SW 1 Depr (3 years useful life) Aug 2004 Equip & SW 2 Depr (3 years useful life) Equip. & Software purchased on Aug 27, 2004 Loan interest Jul-Aug 2004 @ 6%/year

900 6,000 33,000 5,500

3,000

800

1,500 306 5,500 200

56,706 47,000 a c.1 c.2 d h b.1 f g Revenues earned during the period Rent expense July 2004 Rent expense August 2004 Utilities, Repairs, and Salaries for the period Loan interest Jul-Aug 2004 @ 6%/year Office supplies used during the period Depr.Exp. Jul-Aug 2004, Equip & SW 1 Depr.Exp. Aug 2004, Equip & SW 2

conservatism principle

47,000 103,706 5,194

conservatism principle

Cash Revenue A/R Revenue Office Supplies Cash Office Supplies expense Office Supplies Rent Expense Prepaid Rent Cash Utilities,Repairs,& Salaries Cash Equipment & Software Cash A/P Interest Expense Interest Payable Depreciation Expense Accum.Depr. Equip. & Software

40000 40000 7000 7000 900 900 800 800 3000 3000 6000 33000 33000 11000 5500 5500 200 200 1500 1500

Maria Hernandez & Associates Income Statement for the period ended August 31, 2004 July 02 2004 August 31 2004

Revenue Expenses Rent Expense Utilities, Repairs, and Salaries Interest Expense Office Supplies Expense Depreciation Expense Total Expenses Net Income *
* Assumed no income tax applied

47,000

6,000 33,000 200 800 1,806 41,806 5,194

Maria Hernandez & Associates Balance Sheet as of August 31, 2004 July 02 2004 Assets Current Assets Cash in Bank Account Receivables Prepaid Rent Office Supplies Total Current Assets Equipment & Software Less: Accum.Depr. Equip. & Software Net Equipment & Software Total Assets Liabilities and Equity Current Liabilities Account Payables Interest Payables Total Current Liabilities Loan Total Liabilities Equity Maria Hernandes, Equity Retained Earnings Total Equity Total Liabilities and Equity August 31

12,000 6,000 5,000 23,000 27,000 27,000 50,000

20,000 20,000 30,000 30,000 50,000

August 31 2004

6,600 7,000 6,000 5,100 24,700 38,000 (1,806) 36,194 60,894

5,500 200 5,700 20,000 25,700 30,000 5,194 35,194 60,894

Maria Hernandez & Associates Statement of Cash Flow for the period ended August 31, 2004 July 02 2004 August 31 2004

Cash Flows from Operating Activities Net Income Depreciation Expense Increase in Account Receivables Increase in Inventories (Office Supplies) Increase in Account Payables Net cash provided by operating activities Cash Flows from Investing Activities Acquisition of Equipment & Software Net cash used in investing activities Cash Flows from Financing Activities Increase in Interest Payables Net cash used in financing activities Increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

August 31 2004

5,194 1,806 (7,000) (100) 5,500 5,400

(11,000) (11,000)

200 200 (5,400) 12,000 6,600 -