Problem: Below are the accounts of Collegiate Painters. The company has just completed its first year of operations ended September 30, 2007.
Accounts Payable $10,500
Accounts Receivable 13,200
Cash 2,600
Equipment 4,700
Equipment Rental Expense 1,300
Marketing Expense 1,500
Painting Service Revenue 78,800
Salaries Expense 56,000
Salaries Payable 700
Supplies 400
Supplies Expense 4,100
T. Brush, Capital 2,000*
Truck Rental Expense 7,200
Withdrawals 1,000
*Represents the initial investment by the owner.
1. Prepare an income statement, statement of owner's equity, and balance sheet for Collegiate Painters.
2. Assume T. Brush has an opportunity to bring in a friend to form a partnership. What would be an advantage of doing this? What are some disadvantages of the partnership form of business over the sole proprietorship?