Changes in retained earnings

On April 1 Far and Wide Travel Agency Inc. was established. These transactions were completed during the month.

1 Stockholders invested cash in the company in exchange for common stock -    $20,000

2 Paid cash for April office rent -    $900

3 Purchased office equipment for cash -    $2,800

4 Purchased advertising in the Chicago Tribune, on account -    $200

5 Paid cash for office supplies -    $500

6 Earned $9,000 for services provided: Cash of    $1,000 is received from customers, and the balance of $8,000 is billed to customers on account.

7 Paid cash dividends -    $400

8 Paid Chicago Tribune amount due in transaction (4).

9 Paid employees' salaries -    $1,200

10 Received $8,000 in cash from customers who have previously been billed in transaction (6).


(1) prepare a tabular analysis of the transactions using these column headings: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, and Retained Earnings. Include margin explanations for any changes in Retained Earnings.

(2) From an analysis of the column Retained Earnings, compute the net income or net loss for April.

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Accounting Basics: Changes in retained earnings
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