Shaws Garden was started on May 1 with an investment of $45,000 cash. Following
ID: 2492973 • Letter: S
Question
Shaws Garden was started on May 1 with an investment of $45,000 cash. Following 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. No additional common stock was issued in May, but a dividend of $1,600 in cash was paid. Instructions Prepare an income statement and a retained earnings statement for the month of May and a balance sheet at May 31, 2014. Briefly discuss whether the company's first month of operations was a success. Discuss the company's decision to distribute a dividend.Explanation / Answer
Shaw garden
Income Statement
For the Month Ended May 31,2014
Revenues
Service revenue $10400
Expenses
Maintainance and repair expense $2100
Salary and wages expense 1900
Advertising expense 1800
Insurance expense 400
Total expenses 6200
Net income $4200
Shaw garden
Retained earning
For the Month Ended May 31,2014
Retained Earning May 1 0
Add: Net income 4200
Less: Dividend 1600
Retained Earning May 31 2600
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