Question

Income Statement and Balance Sheet

Green Bay Corporation began business in July 2017 as a commercial fishing operation and a passenger service between islands. Shares of stock were issued to the owners in exchange for cash. Boats were purchased by making a down payment in cash and signing a note payable for the balance. Fish are sold to local restaurants on open account, and customers are given 15 days to pay their account. Cash fares are collected for all passenger traffic. Rent for the dock facilities is paid at the beginning of each month. Salaries and wages are paid at the end of the month. The following amounts are from the records of Green Bay Corporation at the end of its first month of operations:

Accounts receivable	$23,800		Notes payable	$85,000
Boats	110,500		Passenger service revenue	17,770
Capital stock	57,000		Rent expense	5,700
Cash	14,850		Retained earnings	?
Dividends	9,300		Salary and wage expense	25,800
Fishing revenue	30,180

1. Using the data given, prepare an income statement for the month ended July 31, 2017.

Green Bay Corporation
Income Statement
For the Month Ended July 31, 2017
Revenues:
	$
Total revenues		$
Expenses:
	$
Total expenses
		$

2. Using the data given, prepare a balance sheet at July 31, 2017.

Green Bay Corporation
Balance Sheet
July 31, 2017
Assets
	$
Total assets	$
Liabilities and stockholders' equity
	$
Total liabilities and stockholders' equity	$

3. While assessing the long-term viability of the Notes Payable, which of the following would you least consider?

1.	The due date.
2.	The interest rate.
3.	The amount of the note.
4.	Any assets been offered as collateral for the loan.

Answer 1

1

Green Bay Corporation
Income Statement
For the Month Ended July 31, 2017
Revenues:
Fishing revenue	$30,180
Passenger service revenue	$17,770
Total revenues		$47,950
Expenses:
Rent expense	$ 5,700
Salary and wage expense	$25,800
Total expenses		$31,500
Net income		$16,450

2

Green Bay Corporation
Balance Sheet
31-Jul-17
Assets
Cash	$       14,850
Accounts receivable	$       23,800
Boats	$     110,500
Total assets	$     149,150
Liabilities and stockholders' equity
Capital stock	$       57,000
Retained earnings	$         7,150
Notes payable	$       85,000
Total liabilities and stockholders' equity	$     149,150

Retained earnings = Net income - dividends = $16,450 - $9,300 = $7,150

3

Amount of note is least likely to be considered.