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Chapter 1: Q5TI. (page 23)

Using the following information, complete the income statement, statement of retained earnings, and balance sheet for DR Painting for the month of March 2018. The business began operations on March 1, 2018. Accounts Receivable \( 1,400 Salaries Expense \) 800 Accounts Payable 1,000 Service Revenue 7,000 Cash 22,300 Office Supplies 1,800 Stock issued during March 40,000 Truck 20,000 Dividends paid during March 1,500 Utilities Expense 200

Short Answer

Expert verified

As per the income statement, net income equals $6,000.

As per the statement of retained earnings, ending balance equals $4,500.

As per the balance sheet, total assets and total liabilities & stockholders鈥� equity equals $45,500.

Step by step solution

01

Income statement

The income statement is shown as follows:

02

Statement of retained earnings

The statement of retained earnings is shown as follows:

03

Balance sheet

The balance sheet is shown as follows:

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Most popular questions from this chapter

Identifying users of accounting information

For each of the users of accounting information, identify whether the user is an external decision maker (E) or an internal decision maker (I):

a. customer

b. company manager

c. Internal Revenue Service

d. lender

e. investor

f. controller

g. cost accountant

h. SEC

Using the accounting equation to analyze business transactions The analysis of the first eight transactions of Advanced Accounting Service follows. Describe each transaction ASSETS EQUITY Common 鈭� Stock Contributed Capital Dividends + Retained Earnings 鈭� 鈭� Salaries Expense Service Revenue + + + + + + + + + + + + + + + + + + + + + + + + + + + 1 2 Bal. 3 Bal. 4 Bal. 5 Bal. 6 Bal. 7 Bal. 8 Bal. Accounts Receivable Cash +13,400 \(13,400 \)13,400 +410 \(13,810 \)13,810 \(13,810 \)13,810 +31,000 \(31,000 \)31,000 +190 \(31,190 鈥�410 \)30,780 鈥�8,000 \(22,780 +790 \)23,570 鈥�1,500 \(22,070 +13,400 \)13,400 \(13,400 \)13,400 鈥�8,000 \(5,400 \)5,400 \(5,400 +31,000 \)31,000 \(31,000 \)31,000 \(31,000 \)31,000 \(31,000 \)31,000 +3,800 \(3,800 \)3,800 鈥�190 \(3,610 \)3,610 \(3,610 \)3,610 \(3,610 +3,800 \)3,800 \(3,800 \)3,800 \(3,800 \)3,800 +790 \(4,590 \)4,590 鈭�1,500 $1,500 LIABILITIES Accounts Payable

Consider the following accounting terms and definitions, and match each term to the definition:

1. Sole proprietorship

2. Faithful representation

3. Partnership

4. IFRS

5. Corporation

6. Audit

a. Set of global accounting guidelines, formulated by

the IASB

b. Holds that fair market value should not be used

over actual costs

c. Stands for Financial Accounting Standards Board

d. Owner is referred to as a proprietor

e. Asserts that accounting information should be

complete, neutral, and free from material error

7. Cost principle

8. FASB

9. Creditors

10. SEC

f. An examination of a company鈥檚 financial statements

and records

g. Has two or more owners (called partners)

h. U.S. governmental agency that oversees the U.S.

financial markets

i. Type of entity that is designed to limit personal

liability exposure of owners to the entity鈥檚 debts

j. Person or business lending money

Let鈥檚 examine a case using Greg鈥檚 Tunes and Sal鈥檚 Silly Songs. It is now the end of the first year of operations, and the stockholders want to know how well each business came out at the end of the year. Neither business kept complete accounting records, and no dividends were paid. The businesses throw together the data shown on the next page at year-end: \( 23,000 8,000 35,000 22,000 \) 10,000 6,000 44,000 9,000 Total Assets Common Stock Total Revenues Total Expenses Greg鈥檚 Tunes: Sal鈥檚 Silly Songs: Total Liabilities Common Stock Total Expenses Net Income To gain information for evaluating the businesses, the stockholders ask you several questions. For each answer, you must show your work to convince the stockholders that you know what you are talking about. Requirements 4. Which business brought in more revenue?

The records of Felix Company show the following at December 31, 2018:

Assets & Liabilities: Equity:

Beginning: Common Stock \( 11,000

Assets \) 67,000 Dividends 8,000

Liabilities 11,000 Revenues 205,000

Ending: Expenses ?

Assets $ 46,000 Retained Earnings, January 1, 2018 45,000

Liabilities 34,000

Requirements 1. Compute the missing amount for Felix Company. You will need to determine Retained Earnings, December 31, 2018, and total stockholders鈥� equity, December 31, 2018. 2. Did Felix earn a net income or suffer a net loss for the year? Compute the amount.
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