Question

Kinney’s Repair Ltd. was started on May 1. A summary of May transactions is presented below.

1.		Shareholders invested £15,572 cash in the business in exchange for ordinary shares.
2.		Purchased equipment for £5,309 cash.
3.		Paid £248 cash for May office rent.
4.		Paid £370 cash for supplies.
5.		Incurred £273 of advertising costs in the Beacon News on account.
6.		Received £4,133 in cash from customers for repair service.
7.		Declared and paid a £1,518 cash dividend.
8.		Paid part-time employee salaries £1,113.
9.		Paid utility bills $144.
10.		Performed repair service worth £1,040 on account.
11.		Collected cash of £121 for services billed in transaction (10).

Prepare a tabular analysis of the transactions. Revenue is called Service Revenue. (If an amount reduces the account balance then enter with a negative sign preceding the number e.g. -15,000 or parenthesis (15,000).)

From an analysis of the Retained Earnings columns, compute the net income or net loss for May.

Answer 1

Assets								=	Liabilities	+	Stockholder's Equity		Retained Earnings
Transactions	Cash	+	Accounts Receivable	+	Supplies	+	Office Equipment	=	Accounts Payable	+	Common Stock	+	Revenues	-	Expenses	-	Dividends
1	15572										15572
2	-5309						5309
3	-248														248
4	-370				370
5									273						273
6	4133												4133
7	-1518																1518
8	-1113														1113
9	-144														144
10			1040										1040
11	121		-121
balances	11124		919		370		5309	=	273	+	15572	+	5173	-	1778	-	1518

total assets = cash +account rec.+ supplies +office equi= 17722

total liabilty = accounts pay.+ common stock +retaines earning = 17722

Revenues		$5173
Less: Expenses
Rent Expense	248
Advertising Expense	273
Salaries Expense	1113
utility bill	144
Total Expenses		(1778)
Net Income		3395

Retained Earnings for the month of may

Beginning Balance of the month	$0
Add: Net income of the month	3395
	3395
Less: Dividend paid of the month	1518
Retained earnings at the end of month	1877

in the tabular form balance sheet

1.		Shareholders invested £15,572 cash in the business in exchange for ordinary shares - this effect cash received so cash increses and issue share so common stock are also increses .
2.		Purchased equipment for £5,309 cash. this effect cash decreses and equipment increses thats a reason to decreses the cash
3.		Paid £248 cash for May office rent.- this effect cash decreses and expenses increses
4.		Paid £370 cash for supplies. this effcet cash decreses and supplies increses
5.		Incurred £273 of advertising costs in the Beacon News on account. - this effect expenses advertisment increses and accounts payble also increses because co not paid yet
6.		Received £4,133 in cash from customers for repair service. cash increses and revenue increses
7.		Declared and paid a £1,518 cash dividend. - cash decreses and dividend account increses
8.		Paid part-time employee salaries £1,113.= salary expenses increses and cash decreses
9.		Paid utility bills $144. = cash decreses and expenses increses
10.		Performed repair service worth £1,040 on account. = accounts receivalble increses and earned revenue
11.		Collected cash of £121 for services billed in transaction= accounts payble decreses and cash increses