Question

On June 1, 2022, Crane Company was started with an initial investment in the company of $21,725 cash. Here are the assets, liabilities, and common stock of the company at June 30, 2022, and the revenues and expenses for the month of June, its first month of operations:
Cash $ 4,960
Notes payable $12,720
Accounts receivable 4,400
Accounts payable 900
Service revenue 7,900
Supplies expense 1,155
Supplies 2,292
Maintenance and repairs expense 690
Advertising expense 400
Utilities expense 210
Equipment 26,300
Salaries and wages expense 1,100
Common stock 21,725

During June, the company issued no additional stock but paid dividends of $1,738.

Prepare an income statement for the month of June.



Prepare a retained earnings statement for the month of June.

Answer 1

Answer:

The preparation is shown below:

Explanation:

The preparation of the month of June income statement for Crane Company is shown below:

                                        Crane company

                                      Income statement  

Revenue  

Service revenue $7,900

Total revenues $7,900 (A)

Less: Expenses

Supplies expense $1,155

Maintenance and repairs expense $690

Advertising expense $400

Utilities expense $210

Salaries and wages expense $1,100

Total revenues $3,555 (B)

Net income $4,345 (A- B)

And, the preparation of the retained earning statement is presented below

                                            Crane company

                                    Retained Earning statement

                                           For the month of June

Beginning balance of retained earning $0

Add: Net income $4,345

Less: Cash Dividend paid -$1,738

Ending balance of retained earning $2,607