Question

Wiley Hill opened Hill's Repairs on March 1 of the current year. During March, the following transactions occurred:

1. Wiley invested $31,000 cash in the business in exchange for common stock.
2. Wiley contributed $106,000 of equipment to the business in exchange for common stock.
3. The company paid $2,600 cash to rent office space for the month of March.
4. The company received $22,000 cash for repair services provided during March.
5. The company paid $6,800 for salaries for the month of March.
6. The company provided $3,600 of services to customers on account.
7. The company paid cash of $1,100 for utilities for the month of March.
8. The company received $3,700 cash in advance from a customer for repair services to be provided in April.
9. The company paid $5,600 in cash dividends.

Based on this information, the total amount of stockholders’ equity reported on the balance sheet at the end of March would be:

Answer 1

Answer:

Working notes:

1. Total investment in the business:

2. Profits made during the year:

Sales revenue:
Repair services provided for cash		$22,000
Repair services provided on account		$3,600
Total revenue		$25,600
Less: Expenses
Office space rent	$2,600
Salaries	$6,800
Expenses for utilities	$1,100	($10,500)
Operating profit		$15,100
Less: Cash dividend paid		($5,600)
Profit made during March		$9,500

3. The amount of $3,700 received in advance from customer for services to be provided in April, will not affect the balance of shareholders’ equity as it doesn’t form the part of revenue for the month of March.

Statement of Stockholders' equity Total investment made (Working note 1) Add: Profit made during March ( Working note 2) Shareholders's equity $137,000 $9,500 $146,500

Cash invested $31,000 Equipment $106,000 Total investment in business $137,000