Preparation of income statement and retained earningson

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Reference no: EM13356378

Preparation of income statement and retained earnings.

On June 1 Fix-It-Up 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	$4,600	Notes payable	$14,000
Accounts receivable	4,000	Accounts payable	500
Revenue	8,000	Supplies	1,000
Supplies	2,400	Gas and oil expense	600
Advertising expense	400	Utilities expense	300
Equipment	32,000	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, 2007.
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: EM13356378

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