Meyer Corporation sells computers and provides computer repair services. The bal
ID: 2420805 • Letter: M
Question
Meyer Corporation sells computers and provides computer repair services. The balances in the General Ledger accounts as of 4/1/15 are as follow:
Cash
$ 30,000
Notes Payable
$ 15,500
Accounts Receivable
17,000
Contributed Capital
63,000
Inventory
8,000
Retained Earnings
45,700
Prepaid Advertising
2,500
Sales Revenue
Building
39,000
Repair Service Revenue
Land
28,000
Cost of Goods Sold (COGS)
Equipment
20,000
Advertising Expense
Accounts Payable
13,000
Salary Expense
Unearned Revenue
$7,300
The business transactions for April are shown below:
APRIL
2 Meyer invested $80,000 cash into the business and contributed $100,000 worth of equipment in exchange for stock.
4 Land and building were purchased for $185,000. Of this amount, $90,000 applied to the land, and $95,000 to the building. The corporation paid $50,000 in cash and financed the remaining balance with debt by signing a note promising to pay in four years.
7 Purchased $10,000 of computer inventory for the business on account.
10 Sold computers to customers for $20,000 receiving the entire amount in cash. The computers cost $15,000 (Hint: There are four accounts in this journal entry)
14 Received $7,000 from a customer on previously billed repair services
18 Meyers Corporation billed customers $15,000 for repair services rendered. Of this amount, $8,500 was received in cash, and the balance was billed on account.
21 Paid $8,000 of accounts payable that had become due.
24 Paid $7,000 for several television advertisements aired in April
27 Received a check from a customer for $6,000 for repair services to be rendered in May
30 Paid employees $15,500 in salaries to employees for work done during the month.
Prepare an income statement for the period ended April 30, 2015. Does April appear to be a profitable month for Meyer Corporation? What is one suggestion you would make to increase the profitability of the business?
Prepare a balance sheet as of April 30, 2015. Use the “Sum” function in Excel for your totals. (Remember: Ending Retained Earnings = Beginning Retained Earnings + Net Income – Dividends)
Cash
$ 30,000
Notes Payable
$ 15,500
Accounts Receivable
17,000
Contributed Capital
63,000
Inventory
8,000
Retained Earnings
45,700
Prepaid Advertising
2,500
Sales Revenue
Building
39,000
Repair Service Revenue
Land
28,000
Cost of Goods Sold (COGS)
Equipment
20,000
Advertising Expense
Accounts Payable
13,000
Salary Expense
Unearned Revenue
$7,300
Explanation / Answer
Sales $20,000
Add:Repair service revenue 15,000
total revenues $35,000
Less:Operating expenses:
Cost of goods sold $15,000
Advertisement expense 7,000
Salary expense 15,500 ($37,500)
Net operating loss $2,500
No, it is running in loss ,,One suggestion would be to decrease advertising expnese
Balance sheet
Cash 71,000 Unearned service revenue 13,300
A/c receivable 16,500 Retained earnings 43,200
Prepaid advertising 2,500 Accounts payable 15,000
Inventory 3,000 Notes paayble 150,500
Buidling 134,000 Captial stock 243,000
Equipment 120,000
Land 118,000
total $465,000 $465,000
Sales $20,000
Add:Repair service revenue 15,000
total revenues $35,000
Less:Operating expenses:
Cost of goods sold $15,000
Advertisement expense 7,000
Salary expense 15,500 ($37,500)
Net operating loss $2,500
No, it is running in loss ,,One suggestion would be to decrease advertising expnese