Question: Financial information related to Derby Interiors for October and November 2006 is as follows:

                                                                   October 31, 2006                    November 30, 2006

Accounts payable                                                  $12,320                                   $13,280

Accounts receivable                                                27,200                                    31,300

Capital stock                                                          15,000                                    15,000

Retained earnings                                                       ?                                              ?

Cash                                                                    48,000                                     81,600

Supplies                                                                 2,400                                      2,000

a. Prepare balance sheets for Derby Interiors as of October 31 and as of November 30, 2006.

b. Determine the amount of net income for November, assuming that no additional capital stock was issued and no dividends were paid during the month.

c. Determine the amount of net income for November, assuming that no additional capital stock was issued but dividends of $10,000 were paid during the month.