Question

On June 1, 2017, Vaughn Manufacturing was started with an initial investment in the company of $22,410 cash. Here are the assets, liabilities, and common stock of the company at June 30, 2017, and the revenues and expenses for the month of June, its first month of operations:

Cash $5,420 Notes payable $13,640
Accounts receivable 4,470 Accounts payable 970
Service revenue 8,320 Supplies expense 1,080
Supplies 2,320 Maintenance and repairs expense 680
Advertising expense 400 Utilities expense 220
Equipment 26,820 Salaries and wages expense 2,220
Common stock 22,410

Required:
In June, the company issued no additional stock but paid dividends of $1,710. Prepare an income statement for the month of June.

Answer 1

Net profit is $3,720

Retained earning for the month is $2,010.

Step-by-step explanation:

Income statement can be described as a financial statement that shows revenue, minus expenses and losses of a company in order to show it net profit. This can be prepared as follows:

Vaughn Manufacturing

Income Statement for the month of June 2017

Particulars Amount ($)

Revenue:

Service revenue 8,320

Expenses:

Supplies expense (1,080)

Maintenance and repairs expense (680)

Advertising expense (400)

Utilities expense (220)

Salaries and wages expense (2,220)

Net profit 3,720

Dividends paid (1,710)

Retained earning for the month 2,010