Financial Accounting, Ch. 1: Introduction to Financial
Statements
Read Ch. 1 of Financial Accounting.
Consider the following as you read:
Every industry has language and processes unique to its sector, and the business world is no
different. Accounting is known as the language of business, and anyone seeking to understand how
business works must become familiar with accounting. As you go through the lessons in this chapter
consider the following:
•
•
How does one determine which form of business is most suitable?
What is the purpose of accounting information?
Preparing an Income Statement, Retained Earnings
Statement, and Balance Sheet
Purpose of Assignment
The purpose of this assignment is to help students become familiar with the presentation of the
income statement and the retained earnings statement, including how parts of the financial
statement is evaluated to determine the operational success of the business.
Assignment Steps
Resources: Financial Accounting: Tools for Business Decision Making, p. 36
Scenario: On June 1, 2017, Elite Service Co. was started with an initial investment in the company
of $22,100 cash. Below are the assets, liabilities, and common stock of the company June 30, 2017,
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 issues no additional stock but paid dividends of $1,400.
Prepare an income statement, retained earnings statement, and balance sheet analyzing your
findings using the questions below, in a total of 1,050 words:
•
•
Briefly address whether the company's first month of operations was a success.
Discuss the company's decision to distribute a dividend.
Use the Excel® spreadsheet to show your work and submit it with your analysis.
P1-3A Prepare an income statement, retained earnings statement and balance sheet; discuss results
On June 1, 2017, Elite 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, 2017, and the revenues an
expenses for the month of June, its first month of operations:
Cash
Accounts receivable
Service revenue
Supplies
Advertising expense
Equipment
Common Stock
$4.600
4.000
7.500
2.400
400
26.000
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
at June 30, 2017.
(b)
Briefly discuss whether the company's first month of operations was a success.
(c ) Discuss the company's decision to distribute a dividend.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with
(a)
ELITE SERVICE CO.
Income Statement
For the Month Ended June 30, 2017
Revenues
Service revenue
Expenses
Salaries and wages expense
Supplies expense
Maintenance and repairs expense
Advertising expense
Utilities expense
Total expenses
Net income
Value
Value
Value
Value
Value
Value
ELITE SERVICE CO.
Retained Earnings Statement
For the Month Ended June 30, 2017
Retained earnings, June 1
?
?
Value
Add: Net income
Value
?
Value
?
Less: Dividends
Retained earnings, June 30
ELITE SERVICE CO.
Balance Sheet
June 30, 2017
Assets
Cash
Accounts receivable
Supplies
Equipment
Total assets
Value
Value
Value
Value
?
Liabilities and Stockholders' Equity
Liabilities
Accounts payable
Notes payable
Total liabilities
Stockholders' equity
Common stock
Retained earnings
Total liabilities and stockholders' equity
Value
Value
?
Value
Value
Value
?
ent and balance sheet; discuss results
vestment in the company of $22,100 cash.
ny at June 30, 2017, and the revenues and
Notes payable
Accounts payable
Supplies expense
Maintenance and repairs expense
Utilities expense
Salaries and wages expense
nds of $1,400.
ement for the month of June and a balance sheet
ations was a success.
ther a number or a formula in cells with a "?" .
$12.000
500
1.000
600
300
1.400
Preparing an Income Statement, Retained
Earnings Statement, and Balance Sheet
Grading Guide
ACC/290 Version 7
Principles of Accounting I
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Preparing an Income Statement,
Retained Earnings Statement, and
Balance Sheet Grading Guide
ACC/290 Version 7
Individual Assignment: Preparing an Income Statement, Retained Earnings Statement,
and Balance Sheet
Purpose of Assignment
The purpose of this assignment is to help students become familiar with the presentation of the income
statement and the retained earnings statement, including how parts of the financial statement is evaluated to
determine the operational success of the business.
Resources Required
Financial Accounting: Tools for Business Decision Making.
Grading Guide
Content
Prepared an income statement, retained
earnings statement, and balance sheet and
analyzed findings using the questions below:
•
•
Briefly whether the company’s first
month of operations was a success.
Discuss the company’s decision to
distribute a dividend.
Based income statement and analysis on the
following scenario:
On June 1, 2017, Elite Service Co. was
started with an initial investment in the
company of $22,100 cash. Below are the
assets, liabilities, and common stock of the
company June 30, 2017, and the revenues
and expenses for the month of June, its first
month of operations:
In June, the company issues no additional
stock but paid dividends of $1,400.
The analysis is 1,050 words in length.
Met
Partially
Met
Not Met
Comments:
2
Preparing an Income Statement,
Retained Earnings Statement, and
Balance Sheet Grading Guide
ACC/290 Version 7
Content
Writing Guidelines
Met
Met
Partially
Met
Not Met
Total
Available
Total
Earned
6
#/6
Partially
Met
Not Met
Total
Available
Total
Earned
3
#/3
9
#/9
The paper—including tables and graphs,
headings, title page, and reference page—is
consistent with APA formatting guidelines and
meets course-level requirements.
Intellectual property is recognized with in-text
citations and a reference page.
Paragraph and sentence transitions are
present, logical, and maintain the flow
throughout the paper.
Sentences are complete, clear, and concise.
Rules of grammar and usage are followed
including spelling and punctuation.
Assignment Total
Additional comments:
#
Comments:
Comments:
3
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