1.Using the following transactions, calculate (a) net income for the period, as

Question

1.Using the following transactions, calculate (a) net income for the period, as well as the ending balance of (b) total assets, (c) total liabilities, and (d) Cash.
a.Opened business by issuing common stock for $36,000.
b.Paid one year’s insurance in advance, $2,400.
c.Billed customers for services rendered, $6,000.
d.Received utility bill, to be paid next month, $400.
e.Received $800 in advance of performing a service.
f.Received $4,400 from customers billed in c.
g.Paid $300 on the utility bill of d.
h.Dividends of $2,000 were declared and paid..

Explanation / Answer

a. Income Statement: Service Revenue 6000 Less: Utilities 400 Insurance 1200 1600 Net Income 4400 Less: Dividends 2000 Retained Earnings 2400 Income Statement: Service Revenue 6000 Less: Utilities 400 Insurance 1200 1600 Net Income 4400 Less: Dividends 2000 Retained Earnings 2400
b.& c. Balance Sheet: Liabilities Assets Common Stock 36000 Advance Insurance 1200 Utilities payble 100 Cash Balance 36500 Advances 800 Customers 1600 Retained Earnings 2400 39300 39300 d. Cash Balance: 36000 Received from customers 4400 Add: Advance 800 Total Cash Available - (A) 41200 Less: insurance 2400 Utilities 300 Dividends 2000 Total Cash paments - (B) 4700 Cash Closing Balance - (A- B) $36,500 Thank you.....    Income Statement: Service Revenue 6000 Less: Utilities 400 Insurance 1200 1600 Net Income 4400 Less: Dividends 2000 Retained Earnings 2400

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