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.
(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.
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