Selected accounts of Andover Consulting, Inc., a financial services business, have the following balances at December 31, 2018, the end of its first year of operations. During the year, Lynne Andover, the only stockholder, bought $15,000 of stock in the business.

Requirements

1. Identify each amount shown as an asset, liability, revenue, or expense.

2. Prepare the income statement of Andover Consulting, Inc., for the year ended December 31, 2018. What is the result of operations for 2018?

3. Assuming the balance in Retained Earnings on December 31, 2018, was $18,100, 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.

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Office Furniture. Utilities Expense.. Accounts Payable. Notes Payable .. Service Revenue Accounts Receivable. Supplies Expense. $ 30,000 Rent Expense. $36,000 19,000 1,100 50,000 2,500 2,200 14,200 5,200 18,000 Cash. Office Supplies. Salaries Expense. Salaries Payable. Property Tax Expense Equipment. . 139,500 5,500 4,000 40,000