Question

For each transaction, indicate whether the related account would be classified in the balance sheet as (a) an asset, (b) a liability, or (c) stockholders' equity: in the income statement as (d) a revenue or (e) an expense; or in the statement of stockholders' equity as (0) a dividend. P1-3B Gator Investments provides financial services related to investment selections, retirement planning, and general insurance needs. For the current year, the company reports the following amounts: Advertising expense33,500 Building Salaries expense $127,600 3,500 15,500 27,000 30,000 Service revenue CHAPTER 1 A Framework for Financial Accounting 50,000 Interest expense 65, 100 Utilities expense Accounts payable Cash 6,400Equipment 5.500 Notes payabie In addition, the company had common stock of $100,000 at the beginning of the year and issued an additional $11,000 during the year. The company also had retained earnings of 530,300 at the beginning of the year and paid dividends of $5,200.

Answer 1

Answer

• Income Statement
  for the period ending

Revenues:
Service revenue		$127,600
Expenses:
Advertising expenses	$33,500
Salaries expenses	$65,100
Interest Expenses	$3,500
Utilities expenses	$15,500
Total Expenses		$117,600
Net Income		$10,000

• Statement of Stockholder’s Equity (including statement of Retained earnings)

	Common Stock	Retained Earnings	Total Stockholder's Equity
Beginning Balance	$100,000	$30,300	$130,300
Issuance of Stock	$11,000		$11,000
Add: Net Income		$10,000	$10,000
Less: Dividends		$5,200	$5,200
Ending balance	$111,000	$35,100	$146,100

• Balance Sheet

Assets
Cash	$5,500
Equipment	$27,000
Building	$150,000
Total Assets	$182,500
Liabilities
Accounts Payable	$6,400
Notes Payable	$30,000
Total Liabilities	$36,400
Stockholder's Equity
Common Stock	$111,000
Retained earnings	$35,100
Total Liabilities & Stockholder's Equity	$182,500