Question

Income Statement and Balance Sheet

Green Bay Corporation began business in July 2017 as a commercial fishing operation and a passenger service between islands. Shares of stock were issued to the owners in exchange for cash. Boats were purchased by making a down payment in cash and signing a note payable for the balance. Fish are sold to local restaurants on open account, and customers are given 15 days to pay their account. Cash fares are collected for all passenger traffic. Rent for the dock facilities is paid at the beginning of each month. Salaries and wages are paid at the end of the month. The following amounts are from the records of Green Bay Corporation at the end of its first month of operations:

Accounts receivable	$17,700		Notes payable	$58,000
Boats	75,400		Passenger service revenue	12,120
Capital stock	38,900		Rent expense	3,900
Cash	8,710		Retained earnings	?
Dividends	6,300		Salary and wage expense	17,600
Fishing revenue	20,590

1. Using the data given, prepare an income statement for the month ended July 31, 2017.

Green Bay Corporation
Income Statement
For the Month Ended July 31, 2017
Revenues:
Fishing revenue	$
Passenger service revenue
Total revenues		$
Expenses:
Rent expense	$
Salary and wage expense
Total expenses
Net income		$

2. Using the data given, prepare a balance sheet at July 31, 2017.

Green Bay Corporation
Balance Sheet
July 31, 2017
Assets
Cash	$
Accounts receivable
Boats
Total assets	$
Liabilities and stockholders' equity
Cash	$
Boats
Notes payable
Total liabilities and stockholders' equity	$

3. While assessing the long-term viability of the Notes Payable, which of the following would you least consider?

1.	The due date.
2.	The interest rate.
3.	The amount of the note.
4.	Any assets been offered as collateral for the loan.

Answer 1

*Retained Earnings = Net income - Dividends

3. While assessing the long-term viability of the Notes Payable, which of the following would you least consider?

the Amount of Note is least likely considered