Question

On August 31, the balance sheet of Marigold Corp. showed Cash $12,000, Accounts Receivable $4,700, Supplies $600, Equipment $6,000, Accounts Payable $6,600, Common Stock $16,050, and Retained Earnings $650. During September, the following transactions occurred.

1.		Paid $3,500 cash for accounts payable due.
2.		Collected $2,050 of accounts receivable.
3.		Purchased additional equipment for $2,350, paying $900 in cash and the balance on account.
4.		Recognized revenue of $7,900, of which $2,550 is collected in cash and the balance is due in October.
5.		Declared and paid a $2,250 cash dividend.
6.		Paid salaries $2,100, rent for September $1,150, and advertising expense $100.
7.		Incurred utilities expense for month on account $180.
8.		Received $12,000 from Capital Bank on a 6-month note payable.

a. Prepare a tabular analysis of the September transactions beginning with August 31 balances. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced. See Illustration 1-8 for example.)

c. Prepare a retained earnings statement for September. (List items that increase retained earnings first.)b. Prepare an income statement for September.

d. Prepare a balance sheet at September 30. (List Assets in order of liquidity.)

Answer 1

a.

Transaction	Balance Sheet										Income Statement
	Assets				=	Liabilities		+	Stockholders' Equity		Revenue	-	Expense	=	Net Income
	Cash	Accounts Receivable	Supplies	Equipment		Accounts Payable	Note Payable		Common Stock	Retained Earnings
Aug. 31 balance	12000	4700	600	6000	=	6600		+	16050	650		-		=
1	-3500				=	-3500		+				-		=
2	2050	-2050			=			+				-		=
3	-900			2350	=	1450		+				-		=
4	2550	5350			=			+		7900	7900	-		=	7900
5	-2250				=			+		-2250		-		=
6a.	-2100				=			+		-2100		-	2100	=	-2100
6b.	-1150				=			+		-1150		-	1150	=	-1150
6c.	-100				=			+		-100		-	100	=	-100
7					=	180		+		-180		-	180	=	-180
8	12000				=		12000	+				-		=
Sep. 30 balance	18600	8000	600	8350	=	4730	12000	+	16050	2770	7900	-	3530	=	4370

b.

Marigold Corp.
Income Statement
For the Month Ended September
Revenue		7900
Less Expenses:
Salaries expense	2100
Rent expense	1150
Advertising expense	100
Utilities expense	180
Total expense		3530
Net income $		4370

c.

Marigold Corp.
Statement of Retained Earnings
For the Month Ended September
Balance, August 31	650
Add: Net income	4370
	5020
Less: Dividends	2250
Balance, September 30	2770

d.

Marigold Corp.
Balance Sheet
September 30
Assets
Cash	18600
Accounts receivable	8000
Supplies	600
Equipment	8350
Total assets	35550
Liabilities and Stockholders' Equity
Notes payable	12000
Accounts payable	4730
Total liabilities	16730
Common stock	16050
Retained earnings	2770
Total stockholders' equity	18820
Total liabilities and stockholders' equity	35550