Shaw%u2019s Garden was started on May 1 with an investment of $45,000 cash. Foll

Question

Shaw%u2019s Garden was started on May 1 with an investment of $45,000 cash. Follow- ing are the assets, liabilities, and common stock of the company on May 31, 2014, and the    revenues and expenses for the month of May, its first month of operations.   Accounts receivable    $ 8,400    Notes payable    $26,000   Service revenue    10,400    Salaries and wages expense    1,900   Advertising expense    1,800    Equipment    58,800   Accounts payable    4,400    Maintenance and repairs expense    2,100   Cash 10,800   Insurance    expense   400   Common stock    45,000   No additional common stock was issued in May, but a dividend of $1,600 in cash was    paid.   Instructions    (a) Prepare an income statement and a retained earnings statement for the month of May    and a balance sheet at May 31, 2014.   (b) Briefly discuss whether the company%u2019s first month of operations was a success.   (c) Discuss the company%u2019s decision to distribute a dividend.
SHOW ALL WORK

Explanation / Answer

Special Delivery
Income statement
For the Month Ended May 31, 2014

Service Revenue $10,400
Expenses:
Salaries and Wages Expense $1,900
Advertising Expense $1,800
Maintenance and Repairs Expense $2,100
Insurance Expense $400
Total Expenses $6,200
Net Income $4,200


Special Delivery
Statement of Retained earnings

For the Month Ended May 31, 2014

Retained Earnings May 1, 2014 $0
Net Income $4,200
Less Dividends ($1,600)
Retained Earnings May 31, 2014 $2,600


Special Delivery
Balance Sheet
May 31, 2014

Assets
Cash $10,800
Accounts Receivable $8,400
Equipment $58,800
Total Assets $78,000

Liabilities
Accounts Payable $4,400
Notes Payable $26,000
Total Liabilities $30,400

Stockholders' Equity
Common Stock $45,000
Retained Earnings $2,600
Total Stockholders' Equity $47,600

Total Liabilities and Stockholders' Equity $78,000


Part 2.
To prepare a Statement of Cash Flows, you need to have comparative income statements and balance sheets. It seems to me that part 2 is impossible to do from the information given, especially since you are not even given the beginning and ending balances of cash.

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