Question

Problem 1. On April 1, Holly Dahl established Holiday Travel Agency LTD. The fo during the month: llowing transactions occurred 1. Shareholders invested $12,000 cash in the business in exchange for ordinary shares 2. Paid $400 cash for April office rent 3. Purchased office equipment for $5,500 cash. 4. Incurred $300 of advertising costs on account. 5. Paid $600 cash for office supplies. 6. Performed services worth $8,500: $2,000 cash is received from customers, and the balance of $6,500 is billed to customers on account. 7. Declared and paid $200 cash dividend. 8. Paid the amount due from transaction 4. Above. Paid employees' salaries $2,200. 9. 10. Received $5,700 in cash from customers billed previously in transaction 6 Instructions: 1. Record the above transactions in the columnar table on the next page (provide the totals for all columns and indicate the amount of total assets and total liabilities & Equity). Calculate the net income and retained earnings for the month of April. 2.

Answer 1

Ans-1-

	Assets							=	Liabilities	+	Stockholder's Equity		Retained Earnings
Transactions	Cash	+	Accounts Receivable	+	Supplies	+	Office Equipment	=	Accounts Payable	+	Common Stock	+	Revenues	-	Expenses	-	Dividends
1	12,000										12,000
2	-400														400
3	-5,500						5,500
4									300						300
5	-600				600
6	2,000		6,500										8,500
7	-200																200
8	-300								-300
9	-2,200														2,200
10	5,700		-5,700
Balance	$10,500	+	800	+	600	+	5,500	=	0	+	12,000	+	8,500	-	2,900	-	200
Total	Assets $17,400							=	Liabilities $0	+	Stockholders' Equity 12,000	+	Retained Earnings 5,400

Net Income for the month of April

Revenues		$8,500
Less: Expenses
Rent Expense	$400
Advertising Expense	$300
Salaries Expense	$2,00
Total Expenses	$2,900
Net Income		$5,600

Retained Earnings for the month of April

Beginning Balance of the month	$0
Add: Net income of the month	$5,600
	$5,600
Less: Dividend paid of the month	$200
Retained earnings at the end of month	$5,400