Reference no: EM132466595

On June 1, Beardsley Service Co. was started with an initial investment in the company of $22,100 cash. Here are the assets and liabilities of the company at June 30, 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

• In June, the company issued no additional stock, but paid dividends of $1,400.

Instructions

Question (a) Prepare an income statement and a retained earnings statement for the month of June and a balance sheet at June 30, 2012.

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

Question (c) Discuss the company's decision to distribute a dividend.

Towne Architects incorporated as licensed architects on April 1, 2012. During the first month of the operation of the business, these events and transactions occurred:

Apr. 1 Stockholders invested $18,000 cash in exchange for common stock of the corporation.

1 Hired a secretary-receptionist at a salary of $375 per week, payable monthly.

2 Paid office rent for the month $900.

3 Purchased architectural supplies on account from Spring Green Company $1,300.

10 Completed blueprints on a carport and billed client $1,900 for services.

11 Received $700 cash advance from J. Madison to design a new home.

20 Received $2,800 cash for services completed and delivered to M. Svetlana.

30 Paid secretary-receptionist for the month $1,500.

30 Paid $300 to Spring Green Company for accounts payable due.

• The company uses these accounts: Cash, Accounts Receivable, Supplies, Accounts Payable, Unearned Service Revenue, Common Stock, Service Revenue, Salaries and Wages Expense, and Rent Expens

Instructions

Question (a) Journalize the transactions, including explanations.

Question (b) Post to the ledger T accounts.

Question (c) Prepare a trial balance on April 30, 2012.