Acct301

ACCT301 Week1

3/3/12

Chapter 1 E1-3:

| (a) | (b) |

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 P1-3A:

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...