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Income statement, retained earnings statement, and balance sheet.

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)

Instructions

(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

Solution Summary

Income statement, retained earnings statements and balance sheets are prepared.

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