Types of accounts and income statement preparation (Learning Objectives 5 & 6) 15–20 min.

Selected accounts of Alden Consulting, Inc., a financial services business, have the following balances at December 31, 2014, the end of its first year of operations. During the year, Lorraine Alden, the only stockholder, bought $5,400 of stock in the business.

Requirements 1. Identify each as an asset, liability, revenue, or expense.
2. Prepare the income statement of Alden Consulting, Inc., for the year ended December 31, 2014. What is the result of operations for 2014?
3. Assuming the balance in Retained Earnings on December 31, 2014, was $21,600, what was the amount of the dividends during the year? Answer by preparing a statement of retained earnings to solve for the dividends. Recall that the business has just completed its first year and has no beginning balance for retained earnings.AppendixLO1

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Office Furniture. Utilities Expense....... Accounts Payable. _ $ 20,000 Rent Expense... $18,000 12,600 Cash.................. 10,000 3,800 Office Supplies.... 500 Notes Payable. 30,000 Salaries Expense. 43,000 Service Revenue 161,000 Salaries Payable............... 2,200 Accounts Receivable.............. 10,500 Property Tax Expense. 2,400 Supplies Expense....... 3,400 Equipment....... 32,000