On August 31, the balance sheet of Nashville Veterinary Clinic showed Cash $9,000, Accounts Receivable $1,700, Supplies $600, Office Equipment $6,000, Accounts Payable $3,600, Common Stock $13,000, and Retained Earnings $700. During September the following transactions occurred.
1. Paid $2,900 cash on accounts payable.
2. Collected $1,300 of accounts receivable.
3. Purchased additional office equipment for $2,100, paying $800 in cash and the balance on account.
4. Earned revenue of $8,000, of which $2,500 is paid in cash and the balance is due in October.
5. Paid cash dividends of $1,000.
6. Paid salaries $1,700, rent for September $900, and advertising expense $300.
7. Incurred utilities expense for month on account $170.
8. Received $10,000 from Capital Bankâ?"money borrowed on a note payable.
Hint: Analyze transactions and prepare income statement, retained earnings statement, and balance sheet.
(SO 6, SO 7 and SO 8)
(a) Prepare a tabular analysis of the September transactions beginning with August 31 balances. The column headings should be as follows: Cash + Accounts Receivable + Supplies + Office Equipment = Notes Payable + Accounts Payable + Common Stock + Retained Earnings.
(a) Ending retained earnings $4,630
(b) Prepare an income statement for September, a retained earnings statement for September, and a balance sheet at September 30.
(b) Net income $4,930
Total assets $29,800
Income statement, retained earnings statements and balance sheets are prepared.