P1-1A Kinney’s Repair Ltd. was started on May 1. A summary of May transactions is presented below. 1. Shareholders invested £10,000 cash in the business in exchange for ordinary shares. 2. Purchased equipment for £5,000 cash. 3. Paid £400 cash for May offi ce rent. 4. Paid £700 cash for supplies. 5. Incurred £250 of advertising costs in the Beacon News on account. 6. Received £4,700 in cash from customers for repair service. 7. Declared and paid a £1,000 cash dividend. 8. Paid part-time employee salaries £1,000. 9. Paid utility bills £160. 10. Performed repair service worth £980 on account. 11. Collected cash of £120 for services billed in transaction (10). Instructions (a) Prepare a tabular analysis of the transactions, using the following column headings: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Share Capital, and Retained Earnings (with separate columns for Revenues, Expenses, and Dividends). Include margin explanations for any changes in Retained Earnings. Revenue is called Service Revenue. (b) From an analysis of the Retained Earnings columns, compute the net income or net loss for May.
P1-1A Kinney’s Repair Ltd. was started on May 1. A summary of May transactions is
presented below.
1. Shareholders invested £10,000 cash in the business in exchange for ordinary shares.
2. Purchased equipment for £5,000 cash.
3. Paid £400 cash for May offi ce rent.
4. Paid £700 cash for supplies.
5. Incurred £250 of advertising costs in the Beacon News on account.
6. Received £4,700 in cash from customers for repair service.
7. Declared and paid a £1,000 cash dividend.
8. Paid part-time employee salaries £1,000.
9. Paid utility bills £160.
10. Performed repair service worth £980 on account.
11. Collected cash of £120 for services billed in transaction (10).
Instructions
(a) Prepare a tabular analysis of the transactions, using the following column headings:
Cash,
and
is called Service Revenue.
(b) From an analysis of the Retained Earnings columns, compute the net income or net
loss for May.
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