Critical Thinking Problem 3.1 (Static) Financial Condition LO 3-1, 3-4, 3-6 At the beginning of the summer, Humphrey Nelson was looking for a way to earn money to pay for his college tuition in the fall. He decided to start a lawn service business in his neighborhood. To get the business started, Humphrey used $\$ 6,000$ from his savings account to open a checking account for his new business, Elegant Lawn Care. He purchased two used power mowers and various lawn care tools for $\$ 2,000$, and paid $\$ 3,600$ for a second-hand truck to transport the mowers. Several of his neighbors hired him to cut their grass on a weekly basis. He sent these customers monthly bills. By the end of the summer, they had paid him $\$ 4,800$ in cash and owed him another $\$ 2,400$. Humphrey also cut grass on an as-needed basis for other neighbors, who paid him $\$ 4,000$. During the summer, Humphrey spent $\$ 800$ for gasoline for the truck and mowers. He paid $\$ 4,000$ to a friend who helped him on several occasions. An advertisement in the local paper cost $\$ 800$. Now, at the end of the summer, Humphrey is concerned because he has only $\$ 3,600$ left in his checking account. He says, "I worked hard all summer and have only $\$ 3,600$ to show for it. It would have been better to leave the money in the bank." Required: Prepare an income statement, a statement of owner's equity (for the three month period ended August 31, 20X1), and a balance sheet (dated August 31, 20X1) for Elegant Lawn Care. Complete this question by entering your answers in the tabs below.
Prepare an income statement (for the three month period ended August 31, 20X1) for Elegant Lawn Care. \begin{tabular}{|l|l|l|} \hline \multicolumn{2}{|c|}{ ELEGANT LAWN CARE } \\ \hline \multicolumn{2}{|c|}{ Income Statement } \\ \hline Revenue & & \\ \hline & & \\ \hline Expenses & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline Total expenses & & \\ \hline \end{tabular}
Prepare a statement of owner's equity (for the three month period ended August 31, 20X1) for Elegant Lawn Care. \begin{tabular}{|l|l|} \hline \multicolumn{1}{|c|}{ ELEGANT LAWN CARE } \\ \hline \multicolumn{1}{|c|}{ Statement of Owner's Equity } \\ \hline \multicolumn{1}{|c|}{ Three Months Ended August 31, 20X1 } \\ \hline Humphrey Nelson, Capital, June 1, 20X1 & \\ \hline Net income for June-August & \\ \hline Humphrey Nelson, Capital, August 31, 20X1 & $\$$ \\ \hline \end{tabular}
Prepare a balance sheet for Elegant Lawn Care, month of August 31, $20 \times 1$.