14 Complete the Balance Sheet and the Income Statement for the following transaction Opening balance: Cash House Mortgage NetWorth Transactions for the month of January: 200 200 square Essay 6 points

Here's how to complete the balance sheet and income statement with the given information. Since we only have beginning balances and no income statement data is provided, we'll focus on the balance sheet. An income statement can't be created without information on revenues and expenses.<br /><br />**Understanding the Balance Sheet Equation**<br /><br />The fundamental accounting equation is:<br /><br />*Assets = Liabilities + Net Worth*<br /><br />This equation *must* always balance. Assets are what you own, liabilities are what you owe, and net worth is the difference (your equity).<br /><br />**Beginning Balance Sheet (Opening Balances)**<br /><br />| Assets | Amount | Liabilities | Amount | Net Worth | Amount |<br />|---------------|-------|-----------------|-------|-----------|-------|<br />| Cash | 200 | Mortgage | 200 | | |<br />| House | 200 | | | | |<br />| **Total Assets** | 400 | **Total Liabilities** | 200 | **Total Net Worth** | 200 |<br /><br />Notice how we calculated the Net Worth:<br /><br />Net Worth = Total Assets - Total Liabilities <br />Net Worth = 400 - 200<br />Net Worth = 200<br /><br />This confirms the given opening balance for Net Worth is correct.<br /><br />**Transactions for January**<br /><br />There are *no* transactions provided for January. Therefore, the balance sheet at the end of January will be identical to the opening balance sheet.<br /><br />**End of January Balance Sheet**<br /><br />| Assets | Amount | Liabilities | Amount | Net Worth | Amount |<br />|---------------|-------|-----------------|-------|-----------|-------|<br />| Cash | 200 | Mortgage | 200 | | |<br />| House | 200 | | | | |<br />| **Total Assets** | 400 | **Total Liabilities** | 200 | **Total Net Worth** | 200 |<br /><br />**Income Statement (January)**<br /><br />We *cannot* create an income statement. An income statement shows revenues and expenses over a period (in this case, January). We have no information about any revenue earned or expenses incurred during the month. If you had details on transactions like salary earned, rent paid, etc., we could then construct an income statement and update the balance sheet accordingly. For example, if the person earned $500 in salary, cash would increase, and so would net worth.<br />