Blue Sky Window Washing Inc. was started on May 1. Here is a summary of the May transactions.

Problems: Set B 145

(d) Cash Tot. trial balance $127,050

$ 29,675 Analyze errors and their effects on the trial balance.

(SO 8)

Analyze transactions and compute net income.

(SO 1)

146 CHAPTER 3 The Accounting Information System

(b) Net income $3,210 Analyze transactions and prepare financial statements.

(SO 1)

(a) Cash $13,500 Stockholders invested $16,000 cash in the company in exchange for common stock.

_ Purchased equipment for $7,000 cash.

. Paid $700 cash for May office rent.

. Paid $400 cash for supplies.

_ Purchased $550 of advertising in the Beacon News on account.

_ Received $5,800 in cash from customers for service.

_ Declared and paid a $500 cash dividend.

. Paid part-time employee salaries $1,700.

. Paid utility bills $140.

. Provided service on account to customers $500. 11. Collected cash of $240 for services billed in transaction (10).

— oO Instructions

(a) Prepare a tabular analysis of the transactions using these column headings: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Common Stock, and Retained Earnings. Revenue is called Service Revenue. Include margin explanations for any changes in Retained Earnings.

(b) From an analysis of the column Retained Earnings, compute the net income or net loss for May.