Question

MIX Inc. is a service business incorporated on January, 2018 to provide personal training for athletes aspiring to play college sports. The following is a simplified list of accounts and amounts reported in its accounting records at the beginning of its second quarter of operations on April 1, 2018(the amounts are in thousands of dollars). The accounts have normal debit or credit balances. Accounts Payable S 600 Notes Payable (long-term) S 200 Accounts Receivable 300 Notes Payable (short-term) 500 Accumulated Depreciation 900 Prepaid Rent 100 Cash 300 Rent Expense 400 Common Stock 200 Retained Earnings Deferred Revenue 200 Salaries and Wages Expense 2200 Depreciation Expense 300 Service Revenue Equipment 3.200 Supplies Income Tax Expense 300 Supplies Expense 200 Interest Revenue 100 Travel Expense 2.600 After the first quarter, MIX had the following transactions: a) Issued additional shares of common stock for $50 on April 15. b) Purchased equipment for $250 cash on May 1 c) Received $400 cash for future services on May 25. d) Borrowed $220 cash on July 1, 2018, signing a six-month note payable. e) Paid two-year insurance premium on equipment in the amount of $600 on July 1, 2018, and debited in full to Prepaid Insurance on that date. Coverage began on July 1. f) Purchased software on July 4, $30 cash. g) Purchased supplies on July 5 on account for future use, $7. h) Recorded revenues on December 6 of $550, including $80 on credit and $470 received in cash. i) Recognized salaries and wages expense on December 7 of $30; paid in cash. j) Collected accounts receivable on December 8, $90. k) Paid accounts payable on December 9, $100. Data for adjusting journal entries on December 31: 1) Amortization for 2018, S5. m) A physical count of supplies on December 31 showed Supplies costing $300 were still on hand. n) Depreciation for 2018, $40. o) Accrued interest of SS on notes payable. p) Salaries and wages incurred but not yet paid or recorded, $30. 4) Service provided but to be collected in January 2019, $45 r) Income tax expense for 2018 was $4 and will be paid in 2019. s) Six months of insurance on equipment has been used.

Answer 1

Mix Inc Company Statement of Retained Earnings For the year Ended December 31, 2018 Beginning Retained Earning Add: Net Income Sub total Less: Dividend Ending Retained Earnings 1500 424 1924 1924

Net Income = Total Revenue - Total Expenses