Prepare an income statement, retained earnings statement and balance sheet; discuss results On June 1, Hightower Service Co. was started with an initial investment in the company of $22,100 cash. Here are the assets, liabilities, and common stock of the company at June 30, and the revenues and expenses for the month of June, its first month of operations:
| Cash |
$4,600 |
|
Notes payable |
$12,000 |
| Accounts receivable |
4,000 |
|
Accounts payable |
500 |
| Service revenue |
7,500 |
|
Supplies expense |
1,000 |
| Supplies |
2,400 |
|
Maintenance and repairs expense |
600 |
| Advertising expense |
400 |
|
Utilities expense |
300 |
| Equipment |
26,000 |
|
Salaries and wages expense |
1,400 |
| Common Stock |
22,100 |
|
|
|
In June, the company issued no additional stock but paid dividends of $1,400.
Instructions
(a) Prepare an income statement and retained earnings statement for the month of June and a balance sheet at June 30, 2014.
(b) Briefly discuss whether the company's first month of operations was a success.
(c ) Discuss the company's decision to distribute a dividend.
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