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Problem Set 1
ACC/300
Problem Set 1
(Chapter 1 - P1-3A)
On June 1, Beardsley Service Co. was started with an initial investment in the company of $22,100 cash. Here are the assets and liabilities of the company at June 30, and the revenues and expenses for the month of June, its first month of operations:
Cash | $ 4,600 | Notes payable | $12,000 |
Accounts receivable | 4,000 | Accounts payable | 500 |
Service revenue | 7,500 | Supplies expense | 1,000 |
Supplies | 2,400 | Maintenance and repairs expense | 600 |
Advertising expense | 400 | Utilities expense | 300 |
Equipment | 26,000 | Salaries and wages expense | 1,400 |
In June, the company issued no additional stock, but paid dividends of $1,400.
Prepare an income statement, retained earnings statement, and balance sheet; discuss results.
(SO 4, 5), AP
Instructions
1. Prepare an income statement and a retained earnings statement for the month of June and a balance sheet at June 30, 2012.
2. Briefly discuss whether the company’s first month of operations was a success.
3. Discuss the company’s decision to distribute a dividend.
Marginal check figures (in blue) provide a key number to let you know you are on the right track.
(a) | Net income | $3,800 |
| Ret. earnings | $2,400 |
| Tot. assets | $37,000 |
A)
Income Statement for the month of June 30th, 2012
Particulars | Details $ | Amount $ |
Service Revenue (A) | | 7,500 |
Less Expenses | | |
Supplies Expense | 1,000 | |
Repairs and Maintenance Expense | 600 | |
Advertising Expense | 400 | |
Utilities Expense | 300 | |
Salaries and wages Expense | 1,400 | |
Total Expenses (B) | | (3,700) |
Net Income (A-B) | | 3,800 |
Statement of Retained Earnings for the month of June
Particulars | Details $ |
Net Income | 3,800 |
Less Dividend | (1,400) |
Retained Earnings | 2,400 |
Balance sheet for the month of June
Liabilities | Amount $ |...