Accounting and the Business Environment

Recording transactions in a general journal

Mar. 2 Sold merchandise inventory on account, terms n/30, to B. Kelp, issuing

invoice no. 501 for \(1,000 (cost, \)680).

6 Issued credit memo to B. Kelp for \(1,000 for merchandise returned to 

thebusiness by the customer. Also accounted for receipt of the 

merchandiseinventory at cost.

21 Purchased merchandise inventory on credit terms of 3/10, n/30 from 

PondCo., \)600.

28 Returned damaged merchandise inventory to Pond Co., issuing a debit

memo for $600.

Journalize the above transactions that should be recorded in the general journal.If a transaction should not be recorded in the general journal, identify the specialjournal that should be used. Assume the company uses the perpetual inventorysystem.

Centerpiece Arrangements has just completed operations for the year ended December 31, 2018. This is the third year of operations for the company. The following data have been assembled for the business: Insurance Expense \( 4,500 Salaries Expense \) 46,000 Service Revenue 70,000 Accounts Payable 17,600 Utilities Expense 1,400 Office Supplies 1,700 Rent Expense 16,000 Dividends 4,800 Common Stock 9,000 Accounts Receivable 8,000 Cash 7,200 Equipment 12,100 Retained Earnings, January 1, 2018 5,100 

Preparing the income statement Prepare the income statement of Centerpiece Arrangements for the year ended December 31, 2018.

Centerpiece Arrangements has just completed operations for the year ended December 31, 2018. This is the third year of operations for the company. The following data have been assembled for the business: Insurance Expense \( 4,500 Salaries Expense \) 46,000 Service Revenue 70,000 Accounts Payable 17,600 Utilities Expense 1,400 Office Supplies 1,700 Rent Expense 16,000 Dividends 4,800 Common Stock 9,000 Accounts Receivable 8,000 Cash 7,200 Equipment 12,100 Retained Earnings, January 1, 2018 5,100 

Preparing the statement of retained earnings 

Prepare the statement of retained earnings of Centerpiece Arrangements for the year ended December 31, 2018

Centerpiece Arrangements has just completed operations for the year ended December 31, 2018. This is the third year of operations for the company. The following data have been assembled for the business: Insurance Expense \( 4,500 Salaries Expense \) 46,000 Service Revenue 70,000 Accounts Payable 17,600 Utilities Expense 1,400 Office Supplies 1,700 Rent Expense 16,000 Dividends 4,800 Common Stock 9,000 Accounts Receivable 8,000 Cash 7,200 Equipment 12,100 Retained Earnings, January 1, 2018 5,100  

Preparing the balance sheet 

Prepare the balance sheet of Centerpiece Arrangements as of December 31, 2018.

Ned Timmons, engineer, is considering using a computerized accounting system for his professional engineering business. Ned has asked that you help him understand the components of a computerized accounting information system by answering the following questions:

Requirements

1. What are the two basic components of a computerized accounting information system?

2. Provide examples of each component.

3. If Ned were interested in an entry-level software system, what software might you recommend?

Recording transactions—sales journal

Feb. 1 Sold merchandise inventory on account, terms n/30, to Cole Co., \(1,050.  

            Cost of goods, \)860. Invoice no. 401.

         6 Sold merchandise inventory for cash, \(950 (cost, \)750).

       12 Collected interest revenue of \(170.

       15 Received cash from Cole Co. in full settlement of its account receivable.

       20 Sold merchandise inventory on account, terms n/30, to Dump Co., 

            Issuing invoice no. 402 for \)500 (cost, \(325).

       22 Sold merchandise inventory for cash, \)600 (cost \(530).

       26 Sold office supplies to an employee for cash of \)150.

       28 Received $500 from Dump Co. in full settlement of its account 

            receivable.

Requirements

1. Prepare headings for a sales journal. Journalize the transactions that should be recorded in the sales journal. Assume the company uses the perpetual inventory system.

2. Total each column of the sales journal.

Recording transactions—cash receipts journal

                  Refer to information in Exercise EB-14.

Requirements

1. Prepare headings for a cash receipts journal. Journalize the transactions that should be recorded in the cash receipts journal.

2. Total each column of the cash receipts journal.

Polk Street Homes had the following cash transactions for the month ended July 31, 2018.

Cash receipts:

Collections from customers $ 25,000

Issued common stock 13,000

Cash payments:

Rent 500

Utilities 2,000

Salaries 1,500

Purchase of equipment 25,000

Payment of cash dividends 4,000

Cash balance, July 1, 2018 14,000

Cash balance, July 31, 2018 19,000

Prepare the statement of cash flows for Polk Street Homes for the month ended

July 31, 2018.

Calculating ROA Matured Water Services had net income for the month of October of \(50,880. Assets as of the beginning and end of the month totaled \)362,000, and $486,000, respectively. Calculate Matured Water Services' ROA for the month of October

Identifying users of accounting information

For each of the users of accounting information, identify whether the user is an external decision maker (E) or an internal decision maker (I):

a. customer

b. company manager

c. Internal Revenue Service

d. lender

e. investor

f. controller

g. cost accountant

h. SEC

Consider the following accounting terms and definitions, and match each term to the definition:

1. Sole proprietorship

2. Faithful representation

3. Partnership

4. IFRS

5. Corporation

6. Audit

a. Set of global accounting guidelines, formulated by

the IASB

b. Holds that fair market value should not be used

over actual costs

c. Stands for Financial Accounting Standards Board

d. Owner is referred to as a proprietor

e. Asserts that accounting information should be

complete, neutral, and free from material error

 7. Cost principle

8. FASB

9. Creditors

10. SEC

f. An examination of a company’s financial statements

and records

g. Has two or more owners (called partners)

h. U.S. governmental agency that oversees the U.S.

financial markets

i. Type of entity that is designed to limit personal

liability exposure of owners to the entity’s debts

j. Person or business lending money

The sales and cash receipts journals of Caverly Office Products include the following entries:

Identify the missing information in the cash receipts journal for those transactionslisted. All credit sales are terms n/30. Assume all the accounts are paid in full.Also, total the columns in the cash receipts journal and show that total debits equaltotal credits.

Analyzing postings from the cash receipts journal

The cash receipts journal of Silver Plastics follows:

Silver’s general ledger includes the following selected accounts, along with theiraccount numbers:

Number Account

110 Cash

115 Accounts Receivable

118 Merchandise Inventory

125 Notes Receivable

510 Sales Revenue

512 Sales Discounts Forfeited

520 Interest Revenue

611 Cost of Goods Sold

Indicate whether each posting reference (a) through (k) should be a

• Check mark (✓) for a posting to a customer account in the accounts 

receivablesubsidiary ledger.

• Account number for a posting to an account in the general ledger. If so, give 

theaccount number.

• Letter (X) for an amount not posted.

Consider the following accounting terms and definitions, and match each term to the definition:

1. Accounting equation

2. Asset

3. Balance sheet

4. Expense

5. Income statement

6. Liability

7. Net income

8. Net loss

9. Revenue

10. Statement of cash flows

11. Statement of retained

earnings

a. An economic resource that is expected to be of benefit

in the future

b. Debts that are owed to creditors

c. Excess of total expenses over total revenues

d. Excess of total revenues over total expenses

e. The basic tool of accounting, stated as

Assets = Liabilities + Equity

f. Decreases in equity that occur in the course of selling

goods or services

g. Increases in equity that occur in the course of selling

goods or services

h. Reports on a business’s cash receipts and cash payments

during a period

i. Reports on an entity’s assets, liabilities, and stockholders’

equity as of a specific date

j. Reports on an entity’s revenues, expenses, and net

income or loss for the period

k. Reports how the company’s retained earnings balance

changed from the beginning to the end of the period

Compute the missing amount in the accounting equation for each entity from the financial information presented:

Assets Liabilities Equity

Hair Styles \( ? \) 36,000 $ 36,000

Style Cuts 90,000 ? 48,000

Your Basket 101,000 68,000 ?

A customer account in the accounts receivable subsidiary ledger of Leger Old Company follows:

Describe the three posted transactions.

Wizco Advertising’s balance sheet data at May 31, 2018, and June 30, 2018, follow:

May 31, 2018 June 30, 2018

Total Assets \( 122,000 \) 287,000

Total Liabilities 66,000 144,000

For each of the following situations that occurred in June, 2018 with regard to

common stock and dividends of a corporation, compute the amount of net income or

net loss during June 2018.

a. The company issued \(10,000 of common stock and paid no dividends.

b. The company issued no common stock. It paid cash dividends of \)3,000.

c. The company issued \(12,500 of common stock and paid cash dividends of

\)30,000.

Mountain Drycleaners started 2018 with total assets of \(19,000 and total liabilities of \)14,000. At the end of 2018, Mountain’s total assets stood at \(12,000 and total liabilities were \)9,000. Requirements 1. Did the stockholders’ equity of Mountain Drycleaners increase or decrease during 2018? By how much? 2. Identify the four possible reasons that stockholders’ equity can change

Mountain Drycleaners started 2018 with total assets of \(19,000 and total liabilities of \)14,000. At the end of 2018, Mountain’s total assets stood at \(12,000 and total liabilities were \)9,000. Requirements 1. Did the stockholders’ equity of Mountain Drycleaners increase or decrease during 2018? By how much? 2. Identify the four possible reasons that stockholders’ equity can change

During 2018, Flowing Rivers Spa reported revenue of \(30,000. Total expenses for the year were \)15,000. Flowing Rivers Spa ended the year with total assets of \(43,000, and it owed debts totaling \)14,000. At year-end 2017, the business reported total assets of \(28,000 and total liabilities of \)14,000. Requirements 1. Compute Flowing Rivers Spa’s net income for 2018. 2. Did Flowing Rivers Spa’s stockholders’ equity increase or decrease during 2018? By how much?

During 2018, Flowing Rivers Spa reported revenue of \(30,000. Total expenses for the year were \)15,000. Flowing Rivers Spa ended the year with total assets of \(43,000, and it owed debts totaling \)14,000. At year-end 2017, the business reported total assets of \(28,000 and total liabilities of \)14,000. Requirements 1. Compute Flowing Rivers Spa’s net income for 2018. 2. Did Flowing Rivers Spa’s stockholders’ equity increase or decrease during 2018? By how much?

The records of Felix Company show the following at December 31, 2018:

Assets & Liabilities: Equity:

Beginning: Common Stock \( 11,000

Assets \) 67,000 Dividends 8,000

Liabilities 11,000 Revenues 205,000

Ending: Expenses ?

Assets $ 46,000 Retained Earnings, January 1, 2018 45,000

Liabilities 34,000

Requirements 1. Compute the missing amount for Felix Company. You will need to determine Retained Earnings, December 31, 2018, and total stockholders’ equity, December 31, 2018. 2. Did Felix earn a net income or suffer a net loss for the year? Compute the amount.

The records of Felix Company show the following at December 31, 2018:

Assets & Liabilities:                           Equity:

Beginning:                                          Common Stock                                  \( 11,000

Assets                             \) 67,000      Dividends                                                8,000

Liabilities                           11,000       Revenues                                            205,000

Ending:                                               Expenses                                                   ?

Assets                             $ 46,000      Retained Earnings, January 1, 2018   45,000

Liabilities                           34,000

Requirements

 1. Compute the missing amount for Felix Company. You will need to determine Retained Earnings, December 31, 2018, and total stockholders’ equity, December 31, 2018. 

2. Did Felix earn a net income or suffer a net loss for the year? Compute the amount.

Recording transactions—purchases journal

___________________________________________________________________

Apr. 2 Purchased merchandise inventory on credit terms of 3/10, n/60 from

Vanderbilt Co., \(2,400.

5 Issued check no. 820 to purchase equipment for cash, \)3,600.

11 Purchased merchandise inventory for cash, \(750, issuing check no. 821.

12 Issued check no. 822 to pay Vanderbilt Co. net amount owed from 

Apr. 2.

19 Purchased office supplies on account from Downing Supplies, \)500. 

Termswere n/EOM.

24 Purchased merchandise inventory on credit terms of net 30 from

Wilmington Sales, \(1,900.

28 Issued check no. 823 to pay for insurance coverage, debiting Prepaid

Insurance for \)1,000.

 ____________________________________________________________________

Requirements

1. Prepare headings for a purchases journal. Journalize the transactions that should berecorded in the purchases journal. The company uses the perpetual inventory system.

2. Total each column of the purchases journal.

The purchases journal of Southeastern Publishing Company follows:

As the manager of a Papa Sean’s restaurant, you must deal with a variety of business transactions. Give an example of a transaction that has each of the following effects on the accounting equation: a. Increase one asset and decrease another asset. b. Decrease an asset and decrease equity. c. Decrease an asset and decrease a liability. d. Increase an asset and increase equity. e. Increase an asset and increase a liability

Indicate the effects of the following business transactions on the accounting equation of Vivian’s Online Video store. Transaction (a) is answered as a guide. a. Received cash of \(10,000 from issuance of common stock. Answer: Increase asset (Cash); Increase equity (Common Stock) b. Earned video rental revenue on account, \)2,800. c. Purchased office furniture on account, \(300. d. Received cash on account, \)400. e. Paid cash on account, \(100. f. Rented videos and received cash of \)200. g. Paid monthly office rent of \(1,000. h. Paid \)100 cash to purchase office supplies

Indicate the effects of the following business transactions on the accounting equation for Sam’s Snack Foods, a supplier of snack foods. Transaction (a) is answered as a guide. a. Sam’s Snack Foods received cash from issuance of common stock to stockholders. Answer: Increase asset (Cash); Increase equity (Common Stock) b. Cash purchase of land for a building site. c. Paid cash on accounts payable. d. Purchased equipment; signed a note payable. e. Performed service for a customer on account. f. Employees worked for the week but will be paid next Tuesday. g. Received cash from a customer on accounts receivable. h. Borrowed money from the bank. i. Cash dividends paid to stockholders. j. Incurred utilities expense on account.

Using the accounting equation to analyze business transactions The analysis of the first eight transactions of Advanced Accounting Service follows. Describe each transaction ASSETS EQUITY Common − Stock Contributed Capital Dividends + Retained Earnings − − Salaries Expense Service Revenue + + + + + + + + + + + + + + + + + + + + + + + + + + + 1 2 Bal. 3 Bal. 4 Bal. 5 Bal. 6 Bal. 7 Bal. 8 Bal. Accounts Receivable Cash +13,400 \(13,400 \)13,400 +410 \(13,810 \)13,810 \(13,810 \)13,810 +31,000 \(31,000 \)31,000 +190 \(31,190 –410 \)30,780 –8,000 \(22,780 +790 \)23,570 –1,500 \(22,070 +13,400 \)13,400 \(13,400 \)13,400 –8,000 \(5,400 \)5,400 \(5,400 +31,000 \)31,000 \(31,000 \)31,000 \(31,000 \)31,000 \(31,000 \)31,000 +3,800 \(3,800 \)3,800 –190 \(3,610 \)3,610 \(3,610 \)3,610 \(3,610 +3,800 \)3,800 \(3,800 \)3,800 \(3,800 \)3,800 +790 \(4,590 \)4,590 −1,500 $1,500 LIABILITIES Accounts Payable

Ashley Stamper opened a medical practice. During July, the first month of operation, the business, titled Ashley Stamper, MD, experienced the following events: Jul. 6 Received a contribution of \(68,000 from Stamper and opened a bank account in the name of A. Stamper, MD. The corporation issued common stock to Stamper. 9 Paid \)56,000 cash for land. 12 Purchased medical supplies for \(1,500 on account. 15 Officially opened for business. 20 Paid cash expenses: employees’ salaries, \)1,300; office rent, \(1,500; utilities, \)100. 31 Earned service revenue for the month, \(13,000, receiving cash. 31 Paid \)1,050 on account. Analyze the effects of these events on the accounting equation of the medical practice of Ashley Stamper, MD, using the following format:

 + – ASSETS EQUITY Rent Expense – Utilities Expense Common – Stock Contributed Capital + + Dividends Retained Earnings – Salaries Expense Service Revenue + Medical Supplies C

Requirements 1. Prepare the income statement for Wilson Towing Service for the month ending June 30, 2018. 2. What does the income statement report?

Requirements 

1. Prepare the income statement for Wilson Towing Service for the month ending June 30, 2018. 

2. What does the income statement report?

Preparing the statement of retained earnings Requirements 1. Prepare the statement of retained earnings for Wilson Towing Service for the month ending June 30, 2018. 2. What does the statement of retained earnings report?

Preparing the statement of retained earnings

 Requirements

1. Prepare the statement of retained earnings for Wilson Towing Service for the month ending June 30, 2018.

2. What does the statement of retained earnings report?

Preparing the balance sheet 

Requirements

1. Prepare the balance sheet for Wilson Towing Service as of June 30, 2018.

2. What does the balance sheet report?

Preparing the balance sheet Requirements 1. Prepare the balance sheet for Wilson Towing Service as of June 30, 2018. 2. What does the balance sheet report?

Prepare the income statement for Damon Design Studio for the year ending December 31, 2018.

Prepare the statement of retained earnings for Damon Design Studio for the year ending December 31, 2018.

Prepare the balance sheet for Damon Design Studio as of December 31, 2018

For each transaction, identify the appropriate section on the statement of cash flows to report the transaction. Choose from: Cash flows from operating activities (O), Cash flows from investing activities (I), Cash flows from financing activities (F), or Is not reported on the statement of cash flows (X). If reported on the statement, decide whether the transaction should be shown as a positive cash flow (+) or a negative cash flow (–):

a. The business received cash from the issuance of common stock.

b. Paid cash on accounts payable for office supplies purchased.

c. Performed services for a customer on account.

d. Cash dividends were paid to stockholders.

e. Received cash from a customer for services performed.

f. Purchased equipment with cash.

g. Paid rent for the month.

h. Purchased land; signed a note payable.

i. Paid employees wages for the week.

j. Incurred utility expense on account.

Tulsa Computer Security uses the perpetual inventory system and 

                  makes all credit sales on terms of n/30. Tulsa completed the 

following transactions during May:

May 2 Issued invoice no. 913 for sale on account to K. D. King, \(2,200 (cost,

\)1,500).

3 Purchased merchandise inventory on credit terms of 3/10, n/60 from

Henderson Co., \(2,900.

5 Sold merchandise inventory for cash, \)1,800 (cost, \(350).

5 Issued check no. 532 to purchase furniture for cash, \)2,950.

8 Collected interest revenue of \(1,350.

9 Issued invoice no. 914 for sale on account to Berkner Co., \)5,700 (cost,

\(2,000).

10 Purchased merchandise inventory for cash, \)1,000, issuing check no. 

533.

12 Received cash from K. D. King in full settlement of her account 

           receivablefrom the sale on May 2.

13 Issued check no. 534 to pay Henderson Co. the net amount owed from

May 3. Round to the nearest dollar.

13 Purchased office supplies on account from Magyar, Inc., \(500. Terms 

           weren/EOM.

15 Sold merchandise inventory on account to M. O. Small, issuing invoice 

no.915 for \)850 (cost, \(400).

18 Issued invoice no. 916 for credit sale to K. D. King, \)300 (cost, \(150).

19 Received cash from Berkner Co. in full settlement of its account 

           receivablefrom May 9.

20 Purchased merchandise inventory on credit terms of n/30 from Silva

Distributing, \)2,100.

22 Purchased furniture on credit terms of 3/10, n/60 from Henderson Co.,

\(500.

22 Issued check no. 535 to pay for insurance coverage, debiting Prepaid

Insurance for \)1,400.

24 Sold office supplies to an employee for cash of \(125, which was Tulsa’s

cost.

25 Received bill and issued check no. 536 to pay utilities, \)550.

28 Purchased merchandise inventory on credit terms of 2/10, n/30 from

Magyar, Inc., \(575.

29 Returned damaged merchandise inventory to Magyar, Inc., issuing a 

            debitmemo for \)575.

29 Sold merchandise inventory on account to Berkner Co., issuing invoice

no. 917 for \(2,400 (cost, \)1,400).

30 Issued check no. 537 to pay Magyar, Inc. in full for May 13 purchase.

31 Received cash in full from K. D. King on credit sale of May 18.

31 Issued check no. 538 to pay monthly salaries of \(2,250.

Requirements

1. Open four-column general ledger accounts using Tulsa’s account numbers 

and balancesas of May 1, 2018, that follow. All accounts have normal 

balances.

Number Account Bal.

111 Cash \) 15,000

112 Accounts Receivable 1,700

114 Merchandise Inventory 7,000

116 Office Supplies 600

117 Prepaid Insurance 0

151 Furniture 2,200

211 Accounts Payable 900

311 Common Stock 10,000

314 Retained Earnings 11,400

411 Sales Revenue 7,800

419 Interest Revenue 1,300

511 Cost of Goods Sold 2,800

531 Salaries Expense 1,900

541 Utilities Expense 200

2. Open four-column accounts in the subsidiary ledgers with beginning 

balances asof May 1, if any. Accounts receivable subsidiary ledger—

Balakrishnan Co., \(1,700;Berkner Co., \)0; M. O. Small, \(0; and K. D. King, 

\)0. Accounts payable subsidiaryledger—Henderson Co., \(0; Magyar, Inc., 

\)0; Silva Distributing, \(0; and WhiteCo., \)900.

3. Enter the transactions in a sales journal (page 7), a cash receipts journal 

(page 5,omit Sales Discounts Forfeited column), a purchases journal (page 

10), a cashpayments journal (page 8), and a general journal (page 6), as 

appropriate.

4. Post daily to the accounts receivable subsidiary ledger and to the accounts 

    payablesubsidiary ledger.

5. Total each column of the special journals. Show that total debits equal total 

    creditsin each special journal. On May 31, post to the general ledger.

6. Prepare a trial balance as of May 31, 2018, to verify the equality of the 

Generalledger. Balance the total of the customer account ending balances 

in the accountsreceivable subsidiary ledger against Accounts Receivable in 

the general ledger. Dothe same for the accounts payable subsidiary ledger 

and Accounts Payable in thegeneral ledger.

Morning Bean Food Equipment Company had the following transactions for the month ending January 31, 2018. Morning Bean’s cash balance on January 1, 2018, was \(11,800. Jan. 1 Common stock was issued to stockholders for \)5,000 cash. 7 Purchased equipment for \(2,400 on account. 14 Paid \)19,000 cash for land. 17 Paid cash expenses: employees’ salaries, \(1,300; office rent, \)1,600; utilities, \(450. 23 Paid cash dividends of \)500. 26 Earned service revenue for the month, $8,500, receiving cash. Prepare the statement of cash flows of Morning Bean Food Equipment Company for the month ended January 31, 2018

Alice Appliance Service had net income for the year of \(58,500. In addition, the balance sheet reports the following balances: Jan 1, 2018 Dec 31, 2018 Notes Payable \) 32,000 $ 58,000 Cash 34,000 134,200 Office Furniture 23,000 44,000 Building 160,000 160,000 Accounts Payable 11,500 11,000 Total Stockholders’ Equity 204,500 333,000 Accounts Receivable 2,200 19,800 Equipment 24,000 42,000 Office Supplies 4,800 2,000 Calculate the return on assets for Alice Appliance Service for the year ending December 31, 2018.

Using the accounting equation for transaction analysis Meg McKinney opened a public relations firm called Solid Gold on August 1, 2018. The following amounts summarize her business on August 31, 2018: During September 2018, the business completed the following transactions: a. Received contribution of \(17,000 cash from Meg McKinney in exchange for common stock. b. Performed service for a client and received cash of \)800. c. Paid off the beginning balance of accounts payable. d. Purchased office supplies from OfficeMax on account, \(1,200. e. Collected cash from a customer on account, \)2,000. f. Cash dividends of \(1,600 were paid to stockholders. g. Consulted for a new band and billed the client for services rendered, \)4,500. h. Recorded the following business expenses for the month: Paid office rent: \(1,000. Paid advertising: \)500. Analyze the effects of the transactions on the account   ting equation of Solid Gold using the format presented in Exhibit 1-6

Conner Thomas started a new business, Thomas Gymnastics, and completed the following transactions during December: Dec. 1 Received \(19,000 cash from Conner in exchange for common stock. 2 Received \)3,800 cash from customers for services performed. 5 Paid \(200 cash for office supplies. 9 Performed services for a customer and billed the customer for services rendered, \)4,500. 10 Received \(200 invoice for utilities due in two weeks. 15 Paid for advertising in the local paper, \)250. 20 Paid utility invoice received on December 10. 25 Collected cash in full from customer billed on December 9. 28 Paid rent for the month, \(1,600. 28 Paid \)1,450 to assistant for wages. 30 Received \(1,400 cash from customers for services performed. 31 Cash dividends of \)3,500 were paid to stockholders. Analyze the effects of the transactions on the accounting equation of Thomas Gymnastics using a format similar to Exhibit 1-6.

Presented here are the accounts of Hometown Décor Company for the year ended December 31, 2018. Land \( 13,000 Common Stock \) 28,000 Notes Payable 33,000 Accounts Payable 14,000 Property Tax Expense 2,800 Accounts Receivable 800 Dividends 36,000 Advertising Expense 17,000 Rent Expense 14,000 Building 170,400 Salaries Expense 67,000 Cash 2,800 Salaries Payable 1,300 Equipment 17,000 Service Revenue 225,000 Insurance Expense 1,700 Office Supplies 8,000 Interest Expense 6,800 Retained Earnings, Dec. 31, 2017 56,000 Requirements 1. Prepare Hometown Décor Company’s income statement

Presented here are the accounts of Hometown Décor Company for the year ended December 31, 2018. Land \( 13,000 Common Stock \) 28,000 Notes Payable 33,000 Accounts Payable 14,000 Property Tax Expense 2,800 Accounts Receivable 800 Dividends 36,000 Advertising Expense 17,000 Rent Expense 14,000 Building 170,400 Salaries Expense 67,000 Cash 2,800 Salaries Payable 1,300 Equipment 17,000 Service Revenue 225,000 Insurance Expense 1,700 Office Supplies 8,000 Interest Expense 6,800 Retained Earnings, Dec. 31, 2017 56,000 Requirements 1. Prepare Hometown Décor Company’s income statement. 2. Prepare the statement of retained earnings. 3. Prepare the balance sheet.

Presented here are the accounts of Hometown Décor Company for the year ended December 31, 2018. Land \( 13,000 Common Stock \) 28,000 Notes Payable 33,000 Accounts Payable 14,000 Property Tax Expense 2,800 Accounts Receivable 800 Dividends 36,000 Advertising Expense 17,000 Rent Expense 14,000 Building 170,400 Salaries Expense 67,000 Cash 2,800 Salaries Payable 1,300 Equipment 17,000 Service Revenue 225,000 Insurance Expense 1,700 Office Supplies 8,000 Interest Expense 6,800 Retained Earnings, Dec. 31, 2017 56,000 Requirements 1. Prepare Hometown Décor Company’s income statement. 2. Prepare the statement of retained earnings. 3. Prepare the balance sheet

Picture Perfect Photography works weddings and prom-type parties. The balance of retained earnings was \(16,000 at December 31, 2017. At December 31, 2018, the business’s accounting records show these balances: Insurance Expense \) 6,000 Accounts Receivable $ 13,000 Cash 42,000 Notes Payable 14,000 Accounts Payable 11,000 Retained Earnings, Dec. 31, 2018 ? Advertising Expense 4,000 Salaries Expense 25,000 Service Revenue 75,000 Equipment 46,000 Dividends 8,000 Common Stock 28,000 Prepare the following financial statements for Picture Perfect Photography for the year ended December 31, 2018: a. Income statement. b. Statement of retained earnings. c. Balance sheet.

Picture Perfect Photography works weddings and prom-type parties. The balance of retained earnings was \(16,000 at December 31, 2017. At December 31, 2018, the business’s accounting records show these balances: Insurance Expense \) 6,000 Accounts Receivable $ 13,000 Cash 42,000 Notes Payable 14,000 Accounts Payable 11,000 Retained Earnings, Dec. 31, 2018 ? Advertising Expense 4,000 Salaries Expense 25,000 Service Revenue 75,000 Equipment 46,000 Dividends 8,000 Common Stock 28,000 Prepare the following financial statements for Picture Perfect Photography for the year ended December 31, 2018: a. Income statement. b. Statement of retained earnings. c. Balance sheet.