To solve this problem, we need to complete the
Income Statement columns of the worksheet. The goal is to determine the Net Income (or Net Loss) for Gurpreet's Lawn Care and Snow Removal for the year ended March 31, 2016.
Here is the step-by-step logic:
Step 1: Identify Revenues and Expenses
First, we look at the "Trial Balance" columns to see which accounts are Revenues (money earned) and which are Expenses (money spent). These amounts are already filled in correctly in the "Income Statement" columns in your image.
Revenues (Credit Column):
* Snow Shovelling Fees: $4,675.00
* Lawn Care Fees: $1,890.00
Expenses (Debit Column):
* Snow Blower Expense: $75.00
* Truck Expense: $250.00
* Miscellaneous Expense: $125.00
* Lawn Care Equipment Expense: $250.00
*(Note: Asset accounts like Chequing Account, Petty Cash, Equipment, etc., and Liability/Capital accounts do not go on the Income Statement. They stay on the Balance Sheet.)*
Step 2: Calculate Total Revenues
Add up all the amounts in the Income Statement
Credit column.
$$4,675.00 + 1,890.00 = \mathbf{6,565.00}$$
Total Revenues = $6,565.00
Step 3: Calculate Total Expenses
Add up all the amounts in the Income Statement
Debit column.
$$75.00 + 250.00 + 125.00 + 250.00 = \mathbf{699.00}$$
Total Expenses = $699.00
Step 4: Calculate Net Income
Net Income is calculated by subtracting Total Expenses from Total Revenues.
$$\text{Net Income} = \text{Total Revenues} - \text{Total Expenses}$$
$$\text{Net Income} = 6,565.00 - 699.00$$
$$\text{Net Income} = \mathbf{5,866.00}$$
Since the Revenues ($6,565) are greater than the Expenses ($699), the business has a
Net Income.
Step 5: Balancing the Worksheet
To balance the Income Statement columns on the worksheet:
1. Write
$5,866.00 in the
Debit column (this represents the Net Income being transferred out of the revenue/expense accounts).
2. Add the columns to ensure they match:
*
Debit Side: $699.00 (Expenses) + $5,866.00 (Net Income) =
$6,565.00
*
Credit Side: $6,565.00 (Revenues)
The columns now balance.
──────────────────────────────────────
Final Answer:
Net Income: $5,866.00
To complete the worksheet rows specifically:
1. In the row below the expenses (usually labeled "Net Income"), enter
5866.00 in the
Income Statement DEBIT column.
2. Draw a single line under the totals.
3. The final total for both the Debit and Credit columns in the Income Statement section is
6565.00.
Parent Tip: Review the logic above to help your child master the concept of balance sheet worksheet.
