Question

Neveranerror Inc. was organized on June 2 by a group of accountants to provide accounting and tax services to small businesses. The following transactions occurred during the first month of business:

June 2:	Received contributions of $10,000 from each of the three owners of the business in exchange for shares of stock.
June 5:	Purchased a computer system for $12,000. The agreement with the vendor requires a down payment of $2,500 with the balance due in 60 days.
June 8:	Signed a two-year promissory note at the bank and received cash of $20,000.
June 15:	Billed $12,350 to clients for the first half of June. Clients are billed twice a month for services performed during the month, and the bills are payable within ten days.
June 17:	Paid a $900 bill from the local newspaper for advertising for the month of June.
June 23:	Received the amounts billed to clients for services performed during the first half of the month.
June 28:	Received and paid gas, electric, and water bills. The total amount is $2,700.
June 29:	Received the landlord’s bill for $2,200 for rent on the office space that Neveranerror leases. The bill is payable by the 10th of the following month.
June 30:	Paid salaries and wages for June. The total amount is $5,670.
June 30:	Billed $18,400 to clients for the second half of June.
June 30:	Declared and paid dividends in the amount of $6,000.

Required:

1. Complete the below table to summarize the preceding transactions as they affect the accounting equation. Ignore depreciation expense and interest expense. If an account is unaffected by a transaction, enter "0". Use the minus sign to indicate decreases.

Neveranerror Inc. Transactions for the Month of June

Assets

=

Liabilities

+

Stockholders' Equity

Date

Cash

Accounts Receivable

Computer

Rent Payable

Accounts Payable

Notes Payable

Capital Stock

Retained Earnings

June 2

$

$

$

$

$

$

$

$

June 5

Bal.

$

$

$

$

$

$

$

$

June 8

Bal.

$

$

$

$

$

$

$

$

June 15

Bal.

$

$

$

$

$

$

$

$

June 17

Bal.

$

$

$

$

$

$

$

$

June 23

Bal.

$

$

$

$

$

$

$

$

June 28

Bal.

$

$

$

$

$

$

$

$

June 29

Bal.

$

$

$

$

$

$

$

$

June 30-Wages

Bal.

$

$

$

$

$

$

$

$

June 30-Billed clients

Bal.

$

$

$

$

$

$

$

$

June 30-Dividends

Bal.

$

$

$

$

$

$

$

$

Total Assets

$

Total Liabilities and Stockholders' Equity

$

2a. Prepare the income statement for the month of June.

Neveranerror Inc.
Income Statement
For the Month Ended June 30
		$
Expenses:
	$
		$

2b. Prepare the statement of retained earnings for the month of June. If an amount is zero, enter "0".

Neveranerror Inc.
Statement of Retained Earnings
For the Month Ended June 30
	$
	$

2c. Prepare the classified balance sheet at June 30.

Neveranerror Inc.
Balance Sheet
June 30
Assets
Current assets:
	$
Total current assets		$
Property, plant, and equipment:
Total assets		$
Liabilities and Stockholders' Equity
Current liabilities:
	$
		$
Long-term debt:
Total liabilities		$
	$
Total stockholders' equity
Total liabilities and stockholders' equity		$

Answer 1