Chapter 1 The Role of Accounting in Business 29ILLUSTRATIVE ACCOUNTING APPLICATION PROBLEM
The financial statements at the end of Spratlin Consulting’s first month of operations are shown
below.Spratlin Consulting
Income Statement
For the Month Ended June 30, 2007Fees earned $36,000
Operating expenses:
Wages expense $12,000
Rent expense 7,640
Utilities expense (a)
Miscellaneous expense 1,320
Total operating expenses 23,120
Net income $ (b)Spratlin Consulting
Retained Earnings Statement
For the Month Ended June 30, 2007Net income for June $ (c)
Less dividends (d)
Retained earnings, June 30, 2007 $ (e)Spratlin Consulting
Balance Sheet
June 30, 2007Assets
Cash $ 5,600
Land 50,000
Total assets $ (f)Liabilities
Accounts payable $ 1,920Stockholders’ Equity
Capital stock (g)
Retained earnings (h)
Total stockholders’ equity $ (i)
Total liabilities and stockholders’ equity $ j