Question

Fredonia Repair Inc. was started on May 1. A summary of May transactions is presented below.

1.Stockholders invested $15,500 cash in the business in exchange for common stock.
2.Purchased equipment for $5,500 cash.
3.Paid $200 cash for May office rent.
4.Paid $600 cash for supplies.
5.Incurred $300 of advertising costs in the Beacon News on account.
Prepare a tabular analysis of the transactions. Revenue is called Service Revenue.From an analysis of the Retained Earnings columns, compute the net income or net loss for May.

Answer 1

To provide a detailed answer, additional information on all of May's revenue and expenses is needed beyond the single $300 advertising expense incurred. Without this data, the net income or net loss for May for Fredonia Repair Inc. cannot be calculated.

Step-by-step explanation:

The question is regarding the tabular analysis of transactions for Fredonia Repair Inc. and computing the net income or net loss for the month of May. As the scenario details an incurred advertising cost of $300 on account, which would be an expense for the company, this amount needs to be considered in the tabular analysis.

To compute the net income or loss, we need to identify all the revenues and expenses for the month of May. Service revenue would be listed in one column and all the expenses in a separate column. By subtracting the total expenses from the total service revenue, we would arrive at the net income if revenues exceed expenses or a net loss if expenses exceed revenues for May.

Since the question only mentions one expense transaction, we cannot calculate a net income or loss with just this one transaction. We would need the complete list of revenues and expenses for May to perform an accurate computation.