Labette Delivery was started on May 1 with an investment of $45,000 cash. To jump start its

Question:

Labette Delivery was started on May 1 with an investment of $45,000 cash. To €œjump start€ its sales, the company spent significant money on advertising. Following are the assets and liabilities of the company on May 31, 2010, and the revenues and expenses for the month of May, its first month of operations.

No additional common stock was issued in May, but a dividend of $1,700 in cash was paid.

Instructions
(a) Prepare an income statement and a retained earnings statement for the month of May and a balance sheet at May 31, 2010.
(b) Briefly discuss whether the company€™s first month of operations was a success.
(c) Discuss the company€™s decision to distribute adividend.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...