Sub: Accounting Topic: Financial Accounting

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Question:

Financial statements for Rawls Repair Corporation

During its first month of operation, the Rawls Repair Corporation, which specializes in bicycle

repairs, completed the following transactions:

Oct. 1 Began business by making a deposit in a company bank account of $12,000, in exchange

for 1,200 shares of $10 par value common stock.

Oct. 1 Paid the premium on a one-year insurance policy, $1,200.

Oct. 1 Paid the current month's rent, $1,040.

Oct. 3 Purchased repair equipment from Conklin Company, $4,400. Paid $600 down and the

balance were placed on account. Payments will be $200.00 per month for nineteen

months. The first payment is due 11/1.

Oct. 8 Purchased repair supplies from McKenna Company on credit, $390.

Oct. 12 Paid utility bill for October, $154.

Oct. 16 Cash bicycle repair revenue for the first half of October, $1,362.

Oct. 19 Made payment to McKenna Company, $200.

Oct. 31 Cash bicycle repair revenue for the last half of October, $1,310.

Sub: Accounting Topic: Financial Accounting

*The Homework solutions from Classof1 are intended to help the student understand the approach to solving the problem and not for submitting the same in

lieu of your academic submissions for grades.

Oct. 31 Declared and paid cash dividend of $800.

Prepare the financial statements for Rawls Repair Corporation as of October 31 in the space

below. Prepare the Income Statement, Statement of Retained Earning and the Balance Sheet.

The Statement of Cash Flows is a required Financial Statement, but is not required for this

Project.

Solution:

Rawls Repair Corporation

Income Statement

For the Month Ending October 31

Revenues

Bicycle repair revenue $2672

Expenses

Store rent expense $1040

Utility expense $154

Insurance expense $100

Repair supplies expense $196

Depreciation expense-Repair equipment $70

Sub: Accounting Topic: Financial Accounting

*The Homework solutions from Classof1 are intended to help the student understand the approach to solving the problem and not for submitting the same in

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Income tax expenses $40

Total expenses $1600

Net Profit $1072

Rawls Repair Corporation

Statement of Retained Earnings

For the Month Ending October 31

Net Profit as per income statement $1072

Less: Dividend paid $800

Retained earnings - Ending $272

Rawls Repair Corporation

Balance Sheet

October 31

Assets

Cash

$10,678

Prepaid insurance

$1,100

Sub: Accounting Topic: Financial Accounting

*The Homework solutions from Classof1 are intended to help the student understand the approach to solving the problem and not for submitting the same in

lieu of your academic submissions for grades.

Classof1 provides expert guidance to College, Graduate, and High school students on homework and assignment problems in

Math, Sciences, Finance, Marketing, Statistics, Economics, Engineering, and many other subjects.

** End of the Solution **

Repair supplies

$194

Repair equipment $4,400

Less: Accumulated depreciation $70 $4,330

Total assets $16,302

Liabilities

Accounts payable

$3,990

Income tax payable

$40

Total liabilities

$4,030

Equities

Common stock

$12,000

Retained earnings

$272

Total equities

$12,272

Total liabilities and equities $16,302