Discuss whether the companys first month of operations

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Reference no: EM13540064

On June 1 Eckersley Service Co. was started with an initial investment in the company of $26,200 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

4,660

Notes payable

12,000

Accounts receivable

4,000

Accounts payable

500

Revenue

7,000

Supplies expense

1,000

Supplies

2,400

Gas and oil expense

600

Advertising expense

400

Utilities expense

300

Equipment

29,000

Wage expense

1,400

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

Instructions

(a) Prepare an income statement and a retained earnings statement for the month of June and a balance sheet at June 30, 2010.

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

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

Reference no: EM13540064

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