Prepare an income statement and a retained

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Reference no: EM13613964

In each situation, state whether the decision maker would bemost likely to place primary emphasis on information provided by the income statement,balance sheet, or statement of cash flows. In each case provide a brief justification foryour choice. Choose only one financial statement in each case.

P1-3A On June 1 Fix-It-Up Service Co. wasstarted with an initial investment in the company of $26,200 cash.Here are the assets and liabilities of the company at June 30, andthe revenues and expenses for the month of June, its first month ofoperations:

Cash $ 4,600 Notespayable $14,000

Accounts receivable 4,000 Accounts payable 500

Revenue 8,000 Supplies expense 1,000

Supplies 2,400 Gas and oil expense 600

Advertising expense 400 Utilities expense 300

Equipment 32,000 Wageexpense 1,400

In June, the company issued no additional stock, but paiddividends of $2,000.

Instructions

(a) Prepare an income statement and a retained earningsstatement for the month of June and a balance sheet at June 30,2007.

(b) Briefly discuss whether the company's first month ofoperations was a success.

Reference no: EM13613964

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