In each situation,
state whether the decision-maker would be most likely to place primary emphasis
on information provided by the income statement, balance sheet, or statement of
cash flows. In each case provide a brief justification for your choice. Choose only
one financial statement in each case.
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
Maintenance and repairs expense
Salaries and wages expense
In June, the company issued no additional stock but paid
dividends of $1,400.
- (a) Prepare an
income statement and a retained earnings statement for the month of June
and a balance sheet at June 30, 2014.
Marginal check figures (in blue) provide a key
number to let you know you are on the right track.
- (b) Briefly
discuss whether the company’s first month of operations was a success.
- (c) Discuss the
company’s decision to distribute a dividend.