Question

New Dawn Window Washing Inc. was started on May 1. Here is a summary of the May transactions.

1. Stockholders invested $20,000 cash in the company in exchange for common stock.

2. Purchased equipment for $9,000 cash.

3. Paid $700 cash for May office rent.

4. Paid $300 cash for supplies.

5. Purchased $750 of advertising in the Beacon News on account.

6. Received $7,200 in cash from customers for service.

7. Paid a $500 cash dividend.

8. Paid part-time employee salaries $1,700.

9. Paid utility bills $140.

10. Provided service on account to customers $1,000.

11. Collected cash of $650 for services billed in transaction (10).

(a) Prepare a tabular analysis of the transactions using these column headings: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Common Stock, and Retained Earnings (with separate columns for Revenues, Expenses, and Dividends). Revenue is called Service Revenue. Include margin explanations for any changes in Retained Earnings. (b) From an analysis of the Retained Earnings columns, compute the net income or net loss for May.

Answer 1

a
	Assets				Liabilities	Stockholders' Equity
							Retained Earnings
	Cash	Accounts Receivable	Supplies	Equipment	Accounts Payable	Common Stock	Revenues	Expenses	Dividends	Explanation for change in Retained Earnings
1	20000					20000
2	-9000			9000
3	-700							-700		Rent expense
4	-300		300
5					750			-750		Advertising expense
6	7200						7200			Service revenue
7	-500								-500	Cash dividends
8	-1700							-1700		Salaries and wages expense
9	-140							-140		Utility expense
10		1000					1000			Service revenue
11	650	-650
Totals	15510	350	300	9000	750	20000	8200	-3290	-500
b
	Total revenue	8200
	Less: Total expense	(3290)
	Net income for May	4910