Acct Week1

Viet Nguyen

Professor Hinojosa

Essentials of Accounting

March 2, 2012

Week 1 Assignment

Chapter 1 E1-3

Accounts payable and accrued liabilities | ___L__ | __O___ |

Accounts receivable | ___A__ | ___O__ |

Property, plant, and equipment | __A___ | ___I__ |

Food and beverage operations revenue | ___R__ | __O___ |

Golf course operations revenue | __R___ | __O___ |

Inventory | ___A__ | __O___ |

Long-term debt | __L___ | __F___ |

Office and general expense | __E___ | __O___ |

Professional fees expense | ___E__ | __O___ |

Wages and benefits expense | ___E__ | ___O__ |

Chapter 1 P1-3

(a) ECKERSLEY SERVICE CO.

Income Statement

For the Month Ended June 30, 2010

Revenues

Revenue $7,000

Expenses

Wage expense $1,400

Supplies expense 1,000

Gas and oil expense 600  

Advertising expense 400  

Utilities expense 300  

Total expenses 3,700 

Net income $3,300

ECKERSLEY SERVICE CO.

Retained Earnings Statement

For the Month Ended June 30, 2010

Retained earnings, June 1 $       0

Add:

  Net income 3,300 

3,300 

Less:   Dividends 2,000 

Retained earnings, June 30 $1,300

ECKERSLEY SERVICE CO.

Balance Sheet

June 30, 2010

Assets

Cash $   4,600

Accounts receivable 4,000  

Supplies 2,400  

Equipment 29,000 

Total assets $40,000

Liabilities and Stockholders’ Equity

Liabilities

Notes payable $12,000

Accounts payable 500   

Total liabilities $12,500

Stockholders’ equity

Common stock 26,200 

Retained earnings 1,300   27,500 

Total liabilities and stockholders’ equity $40,000

(b) Eckersley had a very successful first month, earning $3,300 or a 47% return on revenues of $7,000.   Its net income represents a 13% return on the initial investment ($3,300 ÷ $26,200).

(c) Distributing a dividend after only one month of operations is probably unusual. Most new businesses choose to build up a cash balance to provide for future operating and investing activities or pay down debt. Eckersley distributed 60% ($2000 ÷...