| Course | AC114 Accounting I |
|---|---|
| Unit | Unit 7 |
| Paper type | Financial statement preparation |
| Length | About 560 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC114 Unit 7
Headings, Rules and Subtotals: A Unit 7 Set of Financial Statements for a Window-Cleaning Corporation's June
[Student Name]
Purdue University Global
AC114: Accounting I
Unit 7 Financial Statement Preparation
[Instructor Name]
[Date]
Brightpane Window Care, Inc. and its adjusted balances are composite; the textbook, framework and revenue standard cited are real.
Income Statement
Brightpane Window Care, Inc. Income Statement For the Month Ended June 30
Service revenue: $8,280.
Operating expenses:
1. Salaries expense, $2,760.
2. Supplies expense, $420.
3. Fuel expense, $420.
4. Utilities expense, $310.
5. Depreciation expense, truck, $300.
6. Insurance expense, $150.
7. Depreciation expense, equipment, $100.
Total operating expenses: $4,460.
Operating income: $3,820. Other expense, interest: $75. Net income: $3,745.
Statement of Retained Earnings
Brightpane Window Care, Inc. Statement of Retained Earnings For the Month Ended June 30
Retained earnings, June 1: $0. Add net income: $3,745. Subtotal: $3,745. Less dividends: $1,000. Retained earnings, June 30: $2,745.
Balance Sheet
Brightpane Window Care, Inc. Balance Sheet June 30
Assets Current assets: cash $33,220; accounts receivable $1,580; cleaning supplies $230; prepaid insurance $1,650. Total current assets $36,680. Property and equipment: equipment $6,000 less accumulated depreciation $100, $5,900; truck $22,000 less accumulated depreciation $300, $21,700. Total property and equipment $27,600. Total assets: $64,280.
Liabilities and Stockholders' Equity Current liabilities: unearned service revenue $3,000; accounts payable $3,000; interest payable $75; salaries payable $460. Total current liabilities $6,535. Long-term liabilities: notes payable, due in three years, $15,000. Total liabilities: $21,535. Stockholders' equity: common stock $40,000; retained earnings $2,745. Total stockholders' equity $42,745. Total liabilities and stockholders' equity: $64,280.
Preparation Notes
The order is fixed by what each statement needs. Net income must be known before retained earnings can be updated, and ending retained earnings must be known before the balance sheet can be completed (Franklin et al., 2019). Interest is shown below operating income because borrowing cost is not part of cleaning windows. Dividends appear only on the statement of retained earnings, never as an expense. Expenses are listed from largest to smallest so the reader sees first that crew salaries absorbed one third of June's revenue, and the two depreciation lines are kept separate because the truck and the equipment wear out on different schedules.
The $3,000 of unearned service revenue stays among current liabilities because Brightpane will satisfy that obligation within the next five months by cleaning Crestview Apartments, not by paying anyone cash.
Revenue appears on the income statement only as the monthly cleanings are performed, which is the pattern the revenue standard requires for an obligation satisfied over time (Financial Accounting Standards Board, 2014). The note payable is classified as long-term because no principal is due within twelve months; only its accrued interest is current. Each heading carries the company name, the statement name and the period or date, since a reader must know whether a figure covers a month or a single day, a distinction the framework treats as essential to understandable information (Financial Accounting Standards Board, 2018).
Checks
1. Net income on the income statement, $3,745, equals net income on the statement of retained earnings.
2. Ending retained earnings, $2,745, equals retained earnings on the balance sheet.
3. Total assets of $64,280 equal total liabilities of $21,535 plus equity of $42,745.
4. Every adjusted balance from the Unit 6 worksheet appears on exactly one statement, with dividends on the retained earnings statement.
References
Financial Accounting Standards Board. (2014). Revenue from contracts with customers (Topic 606) (Accounting Standards Update No. 2014-09). https://www.fasb.org
Financial Accounting Standards Board. (2018). Conceptual framework for financial reporting: Chapter 1, The objective of general purpose financial reporting, and Chapter 3, Qualitative characteristics of useful financial information (Statement of Financial Accounting Concepts No. 8, as amended). https://www.fasb.org
Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 1: Financial accounting. OpenStax. https://openstax.org/details/books/principles-financial-accounting
AC114 Unit 7 instructions, in plain terms
The seventh AC114 unit takes adjusted balances, usually from the worksheet, and asks for the financial statements in their fixed sequence: profit first, then the corporation's retained earnings rollforward, then financial position on a single date. Each heading needs three lines: company name, statement name and the period or date. Separate operating expenses from other items such as interest. Carry net income into retained earnings, and ending retained earnings into the balance sheet. Classify the balance sheet into current assets, property and equipment, current liabilities, long-term liabilities and equity. Show accumulated depreciation as a deduction from its asset. Many sections want no commentary, so let precision carry the work. Before submitting, confirm assets equal liabilities plus equity to the dollar. Cite the textbook for any rule explained, in APA 7.
How the AC 114 Unit 7 example is put together
The sample presents the income statement with a three-line heading, service revenue of $8,280, seven operating expenses listed from largest to smallest totaling $4,460, operating income of $3,820, interest of $75 and net income of $3,745. The statement of retained earnings starts at zero, adds net income and subtracts the dividend. The balance sheet groups current assets of $36,680, property and equipment of $27,600 net of depreciation, current liabilities of $6,535, a $15,000 long-term note and equity of $42,745. Preparation notes explain the fixed order, the placement of interest and the dividend rule. The highlighted sentence justifies keeping unearned revenue current. A list of four checks ties every figure across the statements.
AC114 Unit 7 rubric: what earns full points
Statement preparation in AC114 is graded on exact amounts, correct placement and proper format. Headings with the right period or date are checked on every statement. Net income and retained earnings must carry correctly between statements, and graders confirm those links first. Classification on the balance sheet, particularly unearned revenue and long-term debt, earns its own points. Accumulated depreciation must be deducted from its asset. Dividends must not appear on the income statement. Subtotals and rules that a reader can follow add to the format score. A balanced balance sheet is required. Where a rule is explained, the AC114 rubric expects an accurate APA 7 citation, and a reference list belongs on its own page.
AC114 Unit 7 help: mistakes that cost points
Common statement errors include a balance sheet heading that names a period instead of a date, and dividends placed among expenses. Interest is mixed into operating expenses. Unearned revenue is shown as revenue or as a long-term liability. Accumulated depreciation is listed with liabilities. Retained earnings on the balance sheet uses the beginning figure. Subtotals are missing, so the grader cannot follow the arithmetic. Some students also round inside one statement and not the next, so the carried figures disagree by a dollar. When the worksheet is finished but the statements will not tie, a writer can produce all three, formatted, from your adjusted figures.
Get an AC114 Unit 7 example written to your instructions
The Unit 6 worksheet you completed, or the figures your instructor provided, is the starting point; send it with the Unit 7 instructions and rubric. All three statements come back in 24-48h in the format your course expects. The first custom sample is free, with each figure ticked to its source column. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC114 Unit 7 questions, answered
Why does the balance sheet get a single date when the others cover a month?
The income statement and the retained earnings statement measure activity across a span, so their headings name the period. The balance sheet reports what the business holds and owes at one moment, so its heading names that moment. Graders in AC114 check this wording because it tests whether the difference between flows and balances has landed.
Should dividends ever appear on the income statement?
No. Dividends distribute profit to owners after it has been earned; they are not a cost of earning it. In AC114 they appear only on the retained earnings statement, as a subtraction, and later close directly to retained earnings. A dividend shown among expenses understates net income and is marked wrong in every section that works with corporations.
Is interpretation expected alongside the statements?
Rarely in AC114, where the unit tests preparation. Some sections add a short question afterward, but the statements themselves are graded on accuracy and format. A paragraph of commentary will not rescue a misstated figure and occasionally costs points if it strays from the prompt. Where the rubric does request analysis, it usually names the specific ratio or comparison wanted.
Where can I find a free AC114 Unit 7 sample paper?
This page offers a complete AC114 Unit 7 set of financial statements for a window-cleaning corporation, with an income statement, statement of retained earnings and classified balance sheet.
Why is the note long-term in the AC114 Unit 7 sample?
The three-year note's principal is due at maturity, so no principal is payable within twelve months. Only the $75 of accrued interest is a current liability.