Question

Problem 2 Financial information for January and February for Lady Gaga Fashions are as follows: Accounts Payable Accounts Receivable Capital Stock Cash Equipment Prepaid Expenses Retained Earnings Salaries Payable Supplies January 26,000 42,800 40,000 36,500 110,000 8,500 February 24,600 46,500 40,000 42,600 130,000 4,200 2,200 800 2,600 1,000 Required: Prepare a balance sheet as of January and February 2017 Calculate the net income or loss for the month of February (No dividends were paid)

Answer 1

Balance sheet
	January	Feburary
Assets
Cash	$          36,500	$          42,600
Accounts receivable	$          42,800	$          46,500
Prepaid expenses	$            8,500	$            4,200
Supplies	$                800	$            1,000
Equipment	$        110,000	$        130,000
Total assets	$        198,600	$        224,300
Liabilities
Accounts payable	$          26,000	$          24,600
Salaries payable	$            2,200	$            2,600
Total liabilities	$          28,200	$          27,200
Shareholders equity
Capital stock	$          40,000	$          40,000
Retained earnings	$        130,400	$        157,100
Total Shareholders equity	$        170,400	$        197,100
Total liabilities & equity	$        198,600	$        224,300
Just think Assets = liabilties + equity
Net income February
Retained earnings-Feb	$        157,100
Retained earnings-Jan	$        130,400
Change (Net income)	$          26,700