Question

Skysong Inc., a provider of consulting services, was founded on October 1, 2022. At the end of the first month of operations, the company decided to prepare an income statement, retained earnings statement, and balance sheet using the following information. Accounts payable $ 3,700 Supplies $ 2,650 Interest expense 350 Supplies expense 360 Equipment (net) 48,000 Depreciation expense 260 Salaries and wages expense 2,800 Service revenue 19,540 Bonds payable 21,800 Salaries and wages payable 590 Unearned service revenue 4,190 Common stock 9,900 Accounts receivable 1,450 Interest payable 150 Cash 4,000 Using the information, answer the following questions.
Required:
a. Prepare an income statement for the month of October 2022.
b. Prepare a retained earnings statement for the month of October 2022.
c. Prepare a balance sheet as of October 31, 2022.

Answer 1

Answer:

a. Income Statement for the month of October 2022

Revenue:

Service revenue                               $19,540

Expenses:

Salaries and Wages         $2,800

Supplies Expenses           $360

Depreciation Expenses    $260

Interest Expenses             $350  

Total Expenses                                  $3,770

Net Income                                        $15,770

b. Retained earnings statement for the month of October 2022

Retained Earnings, October 1, 2020      $0

Add: Net Income                                      $15,770

Retained Earnings, October 31, 2020  $15,770