Question

Abdullah and Careem investors opened Campus Carpet Cleaning, Company. on September 1, 2012. During the first month of operations, the following transactions occurred. Sept. 1 Stockholders invested $20,000 cash in the business. 2 Paid $1,000 cash for store rent for the month of September. 3 Purchased industrial carpet-cleaning equipment for $25,000, paying $10,000 in cash and signing a $15,000 note payable. 10 Received bill from the Daily News for advertising the opening of the cleaning service, $200. 15 Performed services on account for $6,200. 20 Paid a $700 cash dividend to stockholders. 30 Received $5,000 from customers billed on September 15. Instructions: A) Prepare tabular analyses. B) Prepare Income statement. C) Prepare retained earnings statement. D) Prepare balance sheet.

Abdullah and Careem investors opened Campus Carpet Cleaning, Company. on

September 1, 2012. During the first month of operations, the following transactions

occurred.

Sept. 1 Stockholders invested $20,000 cash in the business.

2 Paid $1,000 cash for store rent for the month of September.

3 Purchased industrial carpet-cleaning equipment for $25,000, paying $10,000

in cash and signing a $15,000 note payable.

10 Received bill from the Daily News for advertising the opening of the cleaning

service, $200.

15 Performed services on account for $6,200.

20 Paid a $700 cash dividend to stockholders.

30 Received $5,000 from customers billed on September 15.

Instructions:

A) Prepare tabular analyses.

B) Prepare Income statement.

C) Prepare retained earnings statement.

D) Prepare balance sheet.

Answer 1

(A)Tabular Analysis:

Assets Liabilities Shareholder's Equity Retained Earnings + Revenues Expenses - Dividends 20,000 1,000 200 Date Cash + Accounts Receivable + Equipment = Notes payable + Accounts payable + Capital 1-Sep 20,000 2-Sep -1,000 3-Sep - 10,000 25,000 15,000 10-Sep 200 15-Sep 6,200 20-Sep -700 30-Sep 5,000 -5,000 13,300 + 1,200 + 25,000 = 15,000 + 200 + 39,500 = 39,500 6,200 700 20,000 + 6,200 1,200 700

(B)Income Statement:

(C)Statement of Retained Earnings:

6,200 Income Statement Revenues: Service revenue Expenses: Advertisement expense Rent expense Net Income(Revenues-Expenses) 200 1,000 1,200 5,000 Statement of Retained Earnings Retained Earnings, Sep 1 2012 0 Add:Net Income 5,000 Less:Dividends 700 Retained Earnings, Sep30 2012 4,300

(D)Balance Sheet:

Balance Sheet Assets Current Assets: Cash Accounts Receivable Total current Assets Non-current assets: Equipment Total non-current assets Total Assets 13,300 1,200 14,500 25,000 25,000 39,500 200 15,000 15,200 Liabilities and Shareholder's Equity Current liabilities: Accounts payable Notes payable Total liablities Shareholder's Equity Capital Retained Earnings Total Shareholder's equity Total liabilities and Shareholder's Equity 20,000 4,300 24,300 39,500