On June 1 Fix-It-Up Service Co. was started with an initial investment in the company of $26,200 cash. Here are the assets and liabilities of the company at June 30, and the revenues and expenses for the month of June, its first month of operations:

Cash $ 4,600 Notes payable $14,000 Accounts receivable 4,000 Accounts payable 500 Revenue 8,000 Supplies expense 1,000 Supplies 2,400 Gas and oil expense 600 Advertising expense 400 Utilities expense 300 Equipment 32,000 Wage expense 1,400 In June, the company issued no additional stock, but paid dividends of $2,000.

Instructions

(a) Prepare an income statement and a retained earnings statement for the month of June and a balance sheet at June 30, 2007.

(b) Briefly discuss whether the company’s first month of operations was a success.

(c) Discuss the company’s decision to distribute a dividend.