Purpose of Assignment
The purpose of this assignment is to help
students become familiar with the presentation of the income statement
and the retained earnings statement, including how parts of the
financial statement is evaluated to determine the operational success of
the business.
Assignment Steps
Resources: Financial Accounting: Tools for Business Decision Making, p. 36
Scenario: On June 1, 2017,
Elite Service Co. was started with an initial investment in the company
of $22,100 cash. Below are the assets, liabilities, and common stock of
the company June 30, 2017, 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 |
|
Common stock |
22,100 |
In June, the company issues no additional stock but paid dividends of $1,400.
Prepare an income statement, retained earnings
statement, and balance sheet analyzing your findings using the questions
below, in a total of 1,050 words:
- Briefly address whether the company’s first month of operations was a success.
- Discuss the company’s decision to distribute a dividend.
Use the Excel® spreadsheet to show your work and submit it with your analysis.
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