Question

[The following information applies to the questions displayed below.] Ricky’s Piano Rebuilding Company has been operating for one year. On January 1, at the start of its second year, its income statement accounts had zero balances and its balance sheet account balances were as follows: Cash $ 7,850 Accounts Payable $ 10,300 Accounts Receivable 15,000 Deferred Revenue (deposits) 4,400 Supplies 2,100 Notes Payable (long-term) 41,500 Equipment 9,500 Common Stock 10,000 Land 8,400 Retained Earnings 5,050 Building 28,400 Following are the January transactions: Received a $690 deposit from a customer who wanted her piano rebuilt in February. Rented a part of the building to a bicycle repair shop; $350 rent received for January. Delivered five rebuilt pianos to customers who paid $15,050 in cash. Delivered two rebuilt pianos to customers for $7,700 charged on account. Received $6,350 from customers as payment on their accounts. Received an electric and gas utility bill for $765 for January services to be paid in February. Ordered $900 in supplies. Paid $2,450 on account in January. Paid $10,900 in wages to employees in January for work done this month. Received and paid cash for the supplies in (g). 5-a. Prepare an income statement for the month ended and at January 31. 5-b. Prepare a statement of retained earnings for the month ended and at January 31. 5-c. Prepare a classified balance sheet for the month ended and at January 31

Answer 1

5-a.

Ricky's Piano Rebuilding Company
Income Statement
For the month ended January 31
	$	$
Service Revenue	22,750
Rent Revenue	350
Total Revenues		23,100
Expenses:
Wages Expense	10,900
Utilities Expense	765
Total Expenses		11,665
Net Income		11,435

5-b.

Ricky's Piano Rebuilding Company
Statement of Retained Earnings
For the month ended January 31
Retained Earnings, January 1	5,050
Net income earned during the period	11,435
Retained Earnings, January 31	16,485

5-c.

Ricky's Piano Rebuilding Company
Balance Sheet
January 31
Assets	$	$
Cash	16,040
Accounts Receivable	16,350
Supplies	3,000
Total Current Assets		35,390
Equipment	9,500
Buildings	28,400
Land	8,400
Total Fixed Assets		46,300
Total Assets		81,690
Liabilities
Accounts Payable	8,615
Deferred Revenue	5,090
Total Current Liabilities		13,705
Long Term Liabilities
Notes Payable		41,500
Total Liabilities		55,205
Stockholders' Equity
Common Stock	10,000
Retained Earnings	16,485
Total Stockholders' Equity		26,485
Total Liabilities and Stockholders' Equity		81,690