The Curtis Company Was Started on January 1, Year 1

question 53

Essay

The Curtis Company was started on January 1, Year 1 as a sole proprietorship. The initial investment from Charlotte Curtis, the owner, was $80,000. During Year 1, the business earned $60,000 in cash revenue and paid $45,000 in cash expenses. Ms. Curtis withdrew $7,000 for her personal use.Required:
Using the above information, prepare an income statement, a capital statement, and a balance sheet for the Curtis Company.

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Definitions:

Constant-Cost Industry

An industry in which the input prices and production costs remain constant as the industry output changes.

Long-Run Equilibrium

A state in which all firms in an industry are producing at their minimum long-run average cost and are earning normal profits.

Units of Output

The measurable amount of goods or services produced by a company or industry.

Internal Economies of Scale

cost advantages that a firm obtains due to expansion, leading to a decrease in the average cost per unit.