A: Prepare a tabular analysis of the transactions. Revenue is called Service Rev
ID: 2604847 • Letter: A
Question
A: Prepare a tabular analysis of the transactions. Revenue is called Service Revenue. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)
B: From an analysis of the Retained Earnings columns, compute the net income or net loss for May. (Income Statement)
Fredonia Repair Inc. was started on May 1. A summary of May transactions is presented below.
Collected cash of $100 for services billed in transaction (10)
1. Stockholders invested $10,000 cash in the business in exchange for common stock. 2. Purchased equipment for $4,000 cash. 3. Paid $200 cash for May office rent. 4. Paid $300 cash for supplies. 5. Incurred $150 of advertising costs in the Beacon News on account. 6. Received $3,700 in cash from customers for repair service. 7. Declared and paid a $1,000 cash dividend. 8. Paid part-time employee salaries $800. 9. Paid utility bills $120. 10. Performed repair services worth $880 on account. 11.Collected cash of $100 for services billed in transaction (10)
Explanation / Answer
Assets Liability + Equity Date Cash + Accounts Receivable + Supplies + Equipment = Accounts payable + Common stock + Retained Earnings 1 10000 10000 2 -4000 4000 3 -200 -200 4 -300 300 5 150 -150 6 3700 3700 7 -1000 -1000 8 -800 -800 9 880 880 10 100 -100 11 -120 -120 7380 780 300 4000 150 10000 2310 INCOME STATEMENT Revenues: Service revenue 4580 Expenses: Salaries and wages expense 800 Rent expense 200 Avertising expense 150 Utilities expense 120 Total expenses 1270 Net income 3310