Question

Samuel Aldrich started his own delivery service, Aldrich Service Inc., on June 1, 2012. The following transactions occurred during the month of June. June 1 Stockholders invested $15,000 cash in the business in exchange for common stock. 2 Purchased a used van for deliveries for $15,000. Samuel paid $2,000 cash and signed a note payable for the remaining balance. 3 Paid $600 for office rent for the month. 5 Performed $2,400 of services on account. 9 Paid $300 in cash dividends. 12 Purchased supplies for $240 on account. 15 Received a cash payment of $750 for services provided on June 5. 17 Received a bill for $200 to cover advertisements in Tri-State News. 20 Received a cash payment of $1,500 for services provided. 23 Made a cash payment of $500 on the note payable. 26 Paid $180 for utilities. 29 Paid for the supplies purchased on account on June 12. 30 Paid $750 for employee salaries. Instructions (a) Show the effects of the previous transactions on the accounting equation using the following format. Assume the note payable is to be repaid within the year. Stockholders’ Assets Liabilities Equity Accounts Notes Accounts Common Retained Earnings Date Cash Receivable Supplies Equipment

Payable Payable Stock Revenues Expenses Dividends Include margin explanations for any changes in Retained Earnings. (b) Prepare an income statement for the month of June. (c) Prepare a classified balance sheet at June 30, 2012.

Answer 1

(a) Showing the effect of the Transactions on the accounting equation using the following format:-

Aldrich Service In.

Tabular format of Accounting Equation

For the Month of June,2021

Date			Assets					=	Liabilities			+	Stockholders		Equity	changes in Retained Earnings
	Cash	+	Accounts Receivable	+	Supplies	+	Equipment	=	Accounts Payable	+	Notes Payable	+	Common Stock	+	Retained Earnings
June 1	$15,000	+		+		+		=		+		+	$15,000	+
2	(2,000)	+		+		+	$15,000	=		+	$13,000	+		+
3	(600)	+		+		+		=		+		+		+	(600)	Office Rent Expense
5		+	$2,400	+		+		=		+		+		+	2,400	Service Revenue
9	(300)	+		+		+		=		+		+		+	(300)	Dividends
12		+		+	$240	+		=	$240	+		+		+
15	750	+	(750)	+		+		=		+		+		+
17		+		+		+		=	200	+		+		+	(200)	Advertising Expense
20	1,500	+		+		+		=		+		+		+	1,500	Service Revenue
23	(500)	+		+		+		=		+	(500)	+		+
26	(180)	+		+		+		=		+		+		+	(180)	Utilities Expense
29	(240)	+		+		+		=	(240)	+		+		+
30	(750)	+		+		+		=		+		+		+	(750)	Salaries Expense
Bal.	$12,680	+	$1,650	+	$240	+	$15,000	=	$200	+	$12,500	+	$15,000	+	$1,870

(b) Preparing Income Statement and Statement of Retained Earnings For the Month Ended June 30,2012:-

Aldrich Service Inc.

Income Statement

For the Month Ended June 30,2012

Accounts	Amount	Amount
Revenues:-
Service Revenue ($2,400+$1,500)	$3,900
Total Revenues		$3,900
Less:- Expenses
Rent Expense	$600
Advertising Expense	200
Utilities Expense	180
Salaries Expense	750
Total Expenses		($1,730)
Net Income		$2,170

Aldrich Service Inc.

Statement of Retained Earnings

For the Month Ended June 30,2012

Accounts	Amount
Retained Earnings Beginning	$0
Add: Net Income	2,170
	$2,170
Less:- Dividends	(300)
Retained Earnings Ending	$1,870

(c) Preparing Classified Balance Sheet:-

Aldrich Service Inc.

Balance Sheet

As of June 30,2012

Accounts	Amount	Amount
Assets:-
Current Assets:-
Cash	$12,680
Accounts Receivable	1,650
Supplies	240
Total Current Assets		$14,570
Property Plant and Equipment:-
Equipment	$15,000
Total Property Plant and Equipment		$15,000
Total Assets		$29,570
Liabilities and Stockholders Equity:-
Liabilities:-
Current Liabilities:-
Accounts Payable	$200
Notes Payable	12,500
Total Current Liabilities		$12,700
Stockholders Equity:-
Common Stock	$15,000
Retained Earnings Ending	1,870
Total Stockholders Equity		$16,870
Total Liabilities and Stockholders Equity		$29,570