Chapter 1, Problem 1.6AP

Income Statement and Balance Sheet

Fort Worth Corporation began business in January 2016 as a commercial carpet-cleaning and drying service. Shares of stock were issued to the owners in exchange for cash. Equipment was purchased by making a down payment in cash and signing a note payable for the balance. Services are performed for local restaurants and office buildings on open account, and customers are given 15 days to pay their accounts. Rent for office and storage facilities is paid at the beginning of each month. Salaries and wages are paid at the end of the month. The following amounts are from the records of Fort Worth Corporation at the end of its first month of operations:

Required

1. Prepare an income statement for the month ended January 31, 2016.
2. Prepare a balance sheet at January 31, 2016.
3. What information would you need about Notes Payable to fully assess Fort Worth’s longterm viability? Explain your answer.