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Acc290 week 1
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.
Use and complete the Excel template in Student Materials for the following:
(a) Prepare an income statement and a retained earnings statement for the month of June and a balance sheet at June 30, 2017.
(b) Briefly discuss whether the company’s first month of operations was a success.(at least one paragraph)
(c) Discuss the company’s decision to distribute a dividend. (at least one paragraph)
Note: There are separate worksheet tabs in the Excel template for the items above.
Click the Assignment Files tab to submit your completed Excel spreadsheet.
P1-3A Prepare an income statement, retained earnings statement and balance sheet; discuss results
On June 1, 2017, Elite Service Co. was started with an initial investment in the company of $22,100 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 $4,600 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 issued no additional stock but paid dividends of $1,400.
Instructions
(a) Prepare an income statement and retained earnings statement for the month of June and a balance sheet
at June 30, 2017.
(b) Briefly discuss whether the company’s first month of operations was a success.
(c ) Discuss the company’s decision to distribute a dividend.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .
(a)
ELITE SERVICE CO.
Income Statement
For the Month Ended June 30, 2017
Revenues
Service revenue Value
Expenses
Salaries and wages expense Value
Supplies expense Value
Maintenance and repairs expense Value
Advertising expense Value
Utilities expense Value
Total expenses ?
Net income ?
ELITE SERVICE CO.
Retained Earnings Statement
For the Month Ended June 30, 2017
Retained earnings, June 1 Value
Add: Net income Value
?
Less: Dividends Value
Retained earnings, June 30 ?
ELITE SERVICE CO.
Balance Sheet
June 30, 2017
Assets
Cash Value
Accounts receivable Value
Supplies Value
Equipment Value
Total assets ?
Liabilities and Stockholders’ Equity
Liabilities
Accounts payable Value
Notes payable Value
Total liabilities ?
Stockholders’ equity
Common stock Value
Retained earnings Value ?
Total liabilities and stockholders’ equity ?
