Question

On June 1, 2017, Windsor, Inc. was started with an initial investment in the company of $22,420 cash. Here are the assets, liabilities, and common stock of the company at June 30, 2017, and the revenues and expenses for the month of June, its first month of operations:
Cash $ 4,830
Notes payable $12,460
Accounts receivable 4,470
Accounts payable 970
Service revenue 7,730
Supplies expense 1,100
Supplies 2,300
Maintenance and repairs expense 700
Advertising expense 400
Utilities expense 200
Equipment 26,230
Salaries and wages expense 1,630
Common stock 22,420
In June, the company issued no additional stock but paid dividends of $1,720.
Required:
1. Prepare an income statement for the month of June.
2. Prepare a retained earnings statement for the month of June.
3. Prepare a balance sheet at June 30, 2017.

Answer 1

Answer:

Windsor, Inc.

1. Income Statement for the month of June:

Service revenue                                   $ 7,730

Supplies expense                  1,100

Maintenance and

 repairs expense                    700

Advertising expense              400

Utilities expense                    200

Salaries & wages expense 1,630

Total expenses                                   $4,030

Net income                                         $3,700

2. Statement of Retained Earnings for the month of June:

Net income                                         $3,700

Dividends paid                                      1,720

Retained earnings                              $1,980

3. Balance Sheet as at June 30, 2017:

Assets:

Current Assets:

Cash                                    $ 4,830  

Accounts receivable              4,470

Supplies                                 2,300   $11,600

Long-term assets:

Equipment                                          26,230

Total assets                                      $37,830

Liabilities + Equity:

Liabilities

Current Liabilities:

Accounts payable                                  $970

Long-term liabilities:

Notes payable                                     12,460

Total liabilities                                   $13,430

Equity:

Common  Stock              $22,420

Retained Earnings               1,980  $24,400

Total liabilities + Equity                   $37,830

Explanation:

a) Data and Calculations:

Trial Balance as of June 30, 2017:

Accounts Titles                     Debit      Credit

Cash                                    $ 4,830  

Accounts receivable              4,470

Supplies                                 2,300

Equipment                           26,230

Notes payable                                   $12,460

Accounts payable                                    970

Service revenue                                    7,730

Supplies expense                  1,100

Maintenance and

 repairs expense                    700

Advertising expense              400

Utilities expense                    200

Salaries & wages expense 1,630

Dividends paid                    1,720

Common stock                                  22,420

Totals                             $43,580    $43,580