Chapter 1, Problem 21AE

Types of accounts and income statement preparation (Learning Objectives 5 & 6) 15-20 min.

Selected accounts of Annis Consulting, Inc., a financial services business, have the following balances at December 31, 2018, the end of its first year of operations. During the year, Laura Annis, the only stockholder, bought $27,000 of stock in the business.

Office Furniture................	$ 21,000	Rent Expense......................	$40,000
Utilities Expense..............	13,500	Cash..................................	5,400
Accounts Payable.............	5,200	Office Supplies...................	1,500
Note Payable.....................	20,000	Salaries Expense..................	41,000
Service Revenue................	141,500	Salaries Payable...................	2,000
Accounts Receivable.........	4,500	Property Tax Expense.........	2,000
Supplies Expense..............	3,800	Equipment..........................	34,000

Requirements

1. 1. Identify each amount shown as an asset, liability, revenue, or expense.
2. 2. Prepare the income statement of Annis Consulting, Inc., for the year ended December 31, 2018. What is the result of operations for 2018?
3. 3. Assuming the balance in Retained Earnings on December 31, 2018, was $36,200, what was the amount of the dividends during the year? Answer by preparing a statement of retained earnings to solve for the dividends. Recall that the business has just completed its first year and has no beginning balance for retained earnings.