Question

On June 1, 2022, Crane Company was started with an initial investment in the company of $26,000 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 $ 4,850
Notes payable $12,500
Accounts receivable 4,250
Accounts payable 750
Service revenue 7,800
Supplies expense 1,100
Supplies 2,329
Maintenance and repairs expense 690
Advertising expense 400
Utilities expense 210
Equipment 30,200
Salaries and wages expense 1,500
Common stock 26,000

During June, the company issued no additional stock but paid dividends of $1,521.
Prepare a retained earnings statement for the month of June.

Answer 1

Answer and Explanation:

For preparing the retained earning statement first we have to determine the net income or net loss which is shown below:

= Service revenue - supplies expense - Maintenance and repairs expense - advertising expense - utilities expense - salaries and wages expense

= $7,800 - $1,100 - $690 - $400 - $210 - $1,500

= $3,900

Now the preparation of the retained earning statement is presented below:

                                        Crane Company

                           Retained Earnings Statement

                                 For the month of June

Beginning balance   $             -

Add: Net income $3,900

Less: Dividends      ($1,521)

Ending balance      $2,379