Week 1 Accounting Homework

Week 1 Accounting Homework

EXERCISE 1-3

| (a) | (b) |
Accounts payable and accrued liabilities | L | O |
Accounts receivable | A | O |
Property, plant, and equipment | A | I |
Food and beverage operations revenue | R | O |
Golf course operations revenue | R | O |
Inventory | A | O |
Long-term debt | L | F |
Office and general expense | E | O |
Professional fees expense | E | O |
Wages and benefits expense | E | O |


PROBLEM 1-3A

(a) ECKERSLEY SERVICE CO.
Income Statement
For the Month Ended June 30, 2010

Revenues
Revenue $7,000
Expenses
Wage expense $1,400
Supplies expense 1,000
Gas and oil expense 600  
Advertising expense 400  
Utilities expense 300  
Total expenses 3,700 
Net income $3,300



PROBLEM 1-3A (Continued)

ECKERSLEY SERVICE CO.
Retained Earnings Statement
For the Month Ended June 30, 2010

Retained earnings, June 1 $ 0
Add: Net income 3,300 
3,300 
Less: Dividends 2,000 
Retained earnings, June 30 $1,300


ECKERSLEY SERVICE CO.
Balance Sheet
June 30, 2010

Assets
Cash $ 4,600
Accounts receivable 4,000  
Supplies 2,400  
Equipment 29,000 
Total assets $40,000

Liabilities and Stockholders’ Equity
Liabilities
Notes payable $12,000
Accounts payable 500   
Total liabilities $12,500
Stockholders’ equity
Common stock 26,200 
Retained earnings 1,300   27,500 
Total liabilities and stockholders’ equity $40,000


(b) Eckersley had a very successful first month, earning $3,300 or a 47% return on revenues of $7,000. Its net income represents a 13% return on the initial investment ($3,300 ÷ $26,200).

PROBLEM 1-3A (Continued)

(c) Distributing a dividend after only one month of operations is probably unusual. Most new businesses choose to build up a cash balance to...

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