On June 1, 2017, Elite Service Co. was started with an initial investment in the company of $22,100 cash. Here are the assets, liabilities, and common stock of the company at June 30, 2017, and the revenues and expenses for the month of June, its fi rst month of operations: (LO 3)

Cash $ 4,600 Notes payable $12,000 Accounts receivable 4,000 Accounts payable 500 Service revenue 7,500 Supplies expense 1,000 Supplies 2,400 Maintenance and repairs expense 600 Advertising expense 400 Utilities expense 300 Equipment 26,000 Salaries and wages expense 1,400 Common stock 22,100 In June, the company issued no additional stock but paid dividends of $1,400.

Instructions

(a) Prepare an income statement and a retained earnings statement for the month of June and a balance sheet at June 30, 2017.

(b) Briefl y discuss whether the company’s fi rst month of operations was a success.

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