Question

Angela Lopez owns and manages a consulting firm called Metrix, which began operations on March 1. On March 31, Metrix shows the following selected accounts and amounts for the month of March. 

Equipment	$9,500	office supplies	$2,600
Salaries expense	4,100	Rental revenue	1,600
Consulting revenue	17,500	Advertising expense	620
Cash	10,200	Prepaid insurance	2,100
Utilities expense	420	Accounts payable	4,820
Note payable	3,500	Note receivable	3,600
Accounts receivable	4,600	Rent expense	3,100
Common stock	16,000	Unearned revenue	520
Dividends	3,100

Required:

 1. Prepare a March income statement for the business.

 2. Prepare a March statement of retained earnings. The Retained Earnings account balance at March 1 was $0.

 3. Prepare a March 31 balance sheet. Hint: Use the Retained Earnings account balance calculated in part 2.

Answer 1

1.

Income Statement
Revenues:
Consulting revenue	17,500
Rental revenue	1,600
Total revenue	19,100
Expenses:
Salaries expense	-4,100
Utilities expense	-420
Advertising expense	-620
Rent expense	-3,100
Total expenses	-8,240
Net Income	$10,860

2.

Statement of Retained Earnings
Beginning retained earnings	0
Net Income	10,860
	$10,860
Dividends	-3,100
Retained earnings, Ending	$7,760

3.

Balance Sheet
Assets	Amount	Liabilities + Stockholders Equity	Amount
Current Assets:		Current Liabilities:
Cash	10,200	Accounts payable	4,820
Accounts receivable	4,600	Note payable	3,500
Office supplies	2,600	Unearned revenue	520
Prepaid insurance	2,100	Total Current Liabilities	8,840
Note receivable	3,600	Stockholders Equity:
Total Current Assets	23,100	Common stock	16,000
Plant,Assets :		Retained earnings	7,760
Equipment	9,500	Total stockholders equity	23,760
Total Assets	$32,600	Total Liabilities & Stockholders Equity	$32,600

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