Assignment Task: Preparing an Income Statement, Retained Earnings Statement, and Balance Sheet
Assignment Aim: 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.
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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