On October 1, Natalie King organized Real Solutions, a new consulting firm. On O

Question

On October 1, Natalie King organized Real Solutions, a new consulting firm. On October 31, the company's records show the following items and amounts.

Using the above information prepare an October 31 balance sheet for Real Solutions.

       Cash $ 2,000 Cash dividends $ 3,360      Accounts receivable 13,000 Consulting fees earned 15,000      Office supplies 4,250 Rent expense 2,550      Land 36,000 Salaries expense 6,000      Office equipment 28,000 Telephone expense 660      Accounts payable 7,500 Miscellaneous expenses 680      Common stock 74,000

Explanation / Answer

Hi,

Please find the answer as follows:

Notes:

Calculation of Net Income:

Consulting Fees = 15000

Less Rent Expense = 2550

Less Salary Expense = 6000

Less Telephone Expense= 660

Less Miscellaneous Expenses= 680

Net Income = 5110

Calculation of Retained Earnings:

Retained Earnings October 1 = 0

Add Net Income = 5110

Less Cash Dividends = 3360

Retained Earnings October 31 = 1750

Thanks.

Real Estate Solutions
Balance Sheet October 31 Cash 2000 Accounts Receivable 13000 Office Supplies 4250 Land 36000 Office Equipment 28000 Total Assets 83250

Liabilties
Accounts Payable (A) 7500 Equity
Common Stock 74000 Retained Earnings 1750 Total Equity (B) 75750 Total Liabilties and Equity (A+B) 83250

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