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
lieu of your academic submissions for grades.
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