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Exercise 3-5 A tabular analysis of the transactions made during August 2017 by Blossom Company during its first month of operations is shown below. Each increase and decrease in stockholders’ equity is explained Assets Liabilities Stockholders Equity Cash A/R Supp. Iquie Accounts Paable Common Stock Retained Earnings ) $15,000 (2) -1900 C3) 550 4) 3,100 $5,400 (5) 1,500 (6) 1,000 15,000 Com. Stock $4 $3,000 550 $8.500 Serv Rev 1,500 $1,000 Di -700 -$700 Rent Exp 350 -350 (9)-2,000 2,000 -200 Sal.Exp Util Exp (10) 200 Prepare an income statement for August
Expert Answer
| BLOSSOM COMPANY | ||
| Income Statement | ||
| For the month ended August 2017 | ||
| Revenue | ||
| Service revenue | $ 8,500.00 | |
| Expenses | ||
| Rent expense | $ 700.00 | |
| Salaries expense | $ 2,000.00 | |
| Utilities expense | $ 200.00 | |
| Total expenses | $ 2,900.00 | |
| Net income | $ 5,600.00 | |
| BLOSSOM COMPANY | ||
| Retained earnings statement | ||
| For the month ended August 2017 | ||
| Retained earnings, August 1, 2017 | $ 0.00 | |
| Add: | Net income | $ 5,600.00 |
| $ 5,600.00 | ||
| Less: | Dividends paid | $ 1,000.00 |
| Retained earnings, August 31, 2017 | $ 4,600.00 | |
| BLOSSOM COMPANY | ||
| Balance Sheet | ||
| As on August 31, 2017 | ||
| Assets | ||
| Current assets | ||
| Cash | $ 10,800.00 | |
| Accounts receivable | $ 5,050.00 | |
| Supplies | $ 550.00 | |
| Total current assets | $ 16,400.00 | |
| Equipment | $ 4,900.00 | |
| Total assets | $ 21,300.00 | |
| Liabilities and Stockholders’ equity | ||
| Liabilities | ||
| Accounts payable | $ 1,700.00 | |
| Total liabilities | $ 1,700.00 | |
| Stockholders’ equity | ||
| Common stock | $ 15,000.00 | |
| Retained earnings | $ 4,600.00 | |
| Total Stockholders’ equity | $ 19,600.00 | |
| Total Liabilities and Stockholders’ equity | $ 21,300.00 | |
