Question

FINANCIAL ACCOUNTING

PROJECT

This project is meant for you to incorporate the semester’s learnings into an actual scenario. You should work on this project as the topics are covered in class.

During the month of October of the current year, Dan’s Accounting Service was opened. The following transactions occurred.

Oct 1   Dan sold $70,000 worth of stock (50 shares) to start the business.

Oct 1   Dan purchased $9,500 worth of office equipment on account from Keene’s

            Furniture Supply.

Oct 1   Dan paid October’s rent on the office. He wrote a check for $2,500.

Oct 2   Dan purchased $400 worth of office supplies for cash.

Oct 4   The telephone was installed. We paid $95 (Utilities Expense).

Oct 4 Dan placed an advertisement in the Anoka County Shopper. It cost $150 (cash).

Oct 4   Dan started a petty cash fund with $50 for a fund balance.

Oct 5   We purchased (for cash) $45 worth of stamps (Miscellaneous Expense).

Oct 5   A three-month umbrella insurance policy was purchased for $720 (cash).

Oct 7   Bebus’s Automotive Supply Company paid us $2,800 (cash) for setting up their

            books.

Oct 9   We earned $3,200 from Dietz’s Fine Furniture Company for setting up their

books. They will pay us later.

Oct 12 We paid a part-time employee $90 for running errands. There are no taxes to be

withheld.

Oct 14 Smith’s Food Service, Inc. paid us $1,700 for helping them with their taxes.

            The actual bill was for $3,500. They will pay us the rest next month.

Oct 19 We paid our part-time employee $80 for running errands. There are no taxes to be

withheld.

Oct 23 We sent a check for $1,000 to Keene’s Furniture Supply for the office equipment

            purchased on October 1st.

Oct 26 We earned $800 for consulting with Anderson’s Clothing Outlet. They will pay

us later.

Oct 26 We paid our part-time employee $50 for running errands. There are no taxes to

be withheld.

Oct 30 Dietz’s Fine Furniture Company paid us $900 on account for the work we did

            for them on October 9.

Oct 30 Dan paid the stockholders $600 in dividends.

Oct 31 Dan paid the electric bill which was $90.

Oct 31 Dan replenished the petty cash fund. He had used $12 for office supplies and $18

for miscellaneous expenses.

REQUIRED:

1) Prepare an Income Statement (don’t forget the Earnings Per Share)

2)  Statement of Retained Earnings

3) Classified Balance Sheet

Answer 1

	Statement of income for the Month of October	Amount($)	Amount($)
	1.Revenues
	Sale of Service	11200
	Total		11200
	2.Expenses
	Rent	2500
	Office Supplies	412
	Utility Expenses	95
	Advt Expenses	150
	Stamps	45
	Insurance	240
	Wages	220
	Electricity	90
	others exp	18
	Total		4370
	3.Operating Income/Net Income(1-2)		6830
	Earning Per Share
1	Net Income	6830
2	No of shares	50
3	Earning per share (1/2)	136.6
	Note:Assumed to be No tax Expenses
	Statement of Retained Earnings
	Balance at beginning	0
	Add:Net profit during the Year	6830
	Balance at the end	6830
	Balance sheet for the month of october
	Assets	Amount($)	Liabilities	Amount($)
	NON CURRENT ASSETS		NoN Current Libilities
	Office Equipment	9500	Note payables	8500
	Current Assets		current Liabilities
	Accounts Receivable	4900	Owners Equity
	Prepaid Insurance	480	Common stock	70000
	cash	70450	Retained earnings	6830
	Total	85330		85330