On October 1, 20X6, Susan Thompson opened Thompson Decorating Services, a sole proprietorship

On October 1, 20X6, Susan Thompson opened Thompson Decorating Services, a sole proprietorship. Susan began operations with $50,000 cash, 60% of which was acquired via an owner investment. The remaining amount was obtained from a bank loan. A review of the accounting records for October revealed the following:

• Asset purchases: Van, $16,000; office equipment, $4,000; and decorator (household) furnishings, $17,000. These amounts were paid in cash except for $2,100 that is still owed for the furnishings acquisition.
• Services performed: Total billings on account, $18,300. Clients have remitted a total of $14,200 in settlement of their balances due.
• Expenses incurred: Salaries, $8,700; advertising, $2,500; taxes, $150; postage, $1,800; utilities, $100; interest, $450; and miscellaneous, $200. These amounts had been paid by month-end with the exception of $700 of the advertising expenditures.

Further information revealed that Thompson withdrew $5,500 of cash from the business on October 31.

Instructions

1. Prepare an income statement for the month ending October 31, 20X6.
2. Prepare a statement of owner's equity for the month ending October 31, 20X6.
3. Prepare a balance sheet as of October 31, 20X6.