Q1) On June 1 Fix-It-Up Service Co. was started with initial investment in company of $26,200 cash. Here are assets and liabilities of the company at June 30, and revenues and expenses for month of June, its first month of operations:
| Cash |
$4,600 |
Notes payable |
$14,000 |
| Accounts receivable |
4,000 |
Accounts payable |
500 |
| Revenue |
8,000 |
Supplies |
1,000 |
| Supplies |
2,400 |
Gas and oil expense |
600 |
| Advertising expense |
400 |
Utilities expense |
300 |
| Equipment |
32,000 |
Wage expense |
1,400 |
In June, company issued no extra stock, but paid dividends of $2,000.
Instructions
a) Create the income statement and retained earnings statement for month of June and balance sheet at June 30, 2007.
b) Briefly describe whether company's first month of operations was success.
c) Explain company's decision to distribute dividend.