M. E. Carter launched a professional services firm on March 1. The firm will pre

Question

M. E. Carter launched a professional services firm on March 1. The firm will prepare financial statements at each month-end. In March (its first month), Carter executed the following transactions. 1) Prepare an income statement for Carter Company for the month of March. 2) Enter the effects of each of the transactions a through g using the financial statement effects template.

a) Carter (owner) invested in the company, $100,000 cash and $20,000 in property and equipment. The company issued common stock for Carter.

b) The company paid $3,200 cash for rent of office furnishing and facilities for March

c) The company performed services for clients and immediately received $4,000 cash earned.

d) The company performed services and sent a bill for $24,000 with payment due within 60 days

e) The company compensated an office employee with $4,800 cash as salary for March

f) The company received $10,000 cash as partial payment on the amount owed from clients in transaction d).

g) The company paid $935 cash in dividends to Carter (owner).

Explanation / Answer

Ans-

Income Statement Rent $                   3,200 Service performed $   4,000 Salaries $                   4,800 Service performed $ 24,000 Profit transferred to retained earning $                 20,000 $                 28,000 $ 28,000

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