Question

A: Prepare a tabular analysis of the transactions. Revenue is called Service Revenue. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)

B: From an analysis of the Retained Earnings columns, compute the net income or net loss for May. (Income Statement)

Fredonia Repair Inc. was started on May 1. A summary of May transactions is presented below.

1.		Stockholders invested $10,000 cash in the business in exchange for common stock.
2.		Purchased equipment for $4,000 cash.
3.		Paid $200 cash for May office rent.
4.		Paid $300 cash for supplies.
5.		Incurred $150 of advertising costs in the Beacon News on account.
6.		Received $3,700 in cash from customers for repair service.
7.		Declared and paid a $1,000 cash dividend.
8.		Paid part-time employee salaries $800.
9.		Paid utility bills $120.
10.		Performed repair services worth $880 on account.
11.		Collected cash of $100 for services billed in transaction (10)

Answer 1

	Assets								Liability	+	Equity
Date	Cash	+	Accounts Receivable	+	Supplies	+	Equipment	=	Accounts payable	+	Common stock	+	Retained Earnings
1	10000										10000
2	-4000						4000
3	-200												-200
4	-300				300
5									150				-150
6	3700												3700
7	-1000												-1000
8	-800												-800
9			880										880
10	100		-100
11	-120												-120
	7380		780		300		4000		150		10000		2310

INCOME STATEMENT
Revenues:
Service revenue		4580
Expenses:
Salaries and wages expense	800
Rent expense	200
Avertising expense	150
Utilities expense	120
Total expenses		1270
Net income		3310