Monthly Transactions, Adjustments, and Financial Statements

Moonlight Bay Inn is incorporated on January 2, 2017, by its three owners, each of whom contributes $20,000 in cash in exchange for shares of stock in the business. In addition to the sale of stock, the following transactions are entered into during the month of January:

January 2:	A Victorian inn is purchased for $50,000 in cash. An appraisal performed on this date indicates that the land is worth $15,000, and the remaining balance of the purchase price is attributable to the house. The owners estimate that the house will have an estimated useful life of 25 years and an estimated salvage value of $5,000.
January 3:	A two-year, 12%, $30,000 promissory note was signed at Second State Bank. Interest and principal will be repaid on the maturity date of January 3, 2019.
January 4:	New furniture for the inn is purchased at a cost of $15,000 in cash. The furniture has an estimated useful life of ten years and no salvage value.
January 5:	A 24-month property insurance policy is purchased for $6,000 in cash.
January 6:	An advertisement for the inn is placed in the local newspaper. Moonlight Bay pays $450 cash for the ad, which will run in the paper throughout January.
January 7:	Cleaning supplies are purchased on account for $950. The bill is payable within 30 days.
January 15:	Wages of $4,230 for the first half of the month are paid in cash.
January 16:	A guest mails the business $980 in cash as a deposit for a room to be rented for two weeks. The guest plans to stay at the inn during the last week of January and the first week of February.
January 31:	Cash receipts from rentals of rooms for the month amount to $8,300.
January 31:	Cash receipts from operation of the restaurant for the month amount to $6,600.
January 31:	Each stockholder is paid $200 in cash dividends.

Assume a 360-day year. When required, do not round your intermediate calculations and round your final answers to the nearest whole dollar.

4a. Prepare an income statement for the month ended January 31, 2017.

Moonlight Bay Inn
Income Statement
For the Month Ended January 31, 2017
Revenues:
	$fill in the blank 0fc548fecfca00a_2
	fill in the blank 0fc548fecfca00a_4
Total revenues		$fill in the blank 0fc548fecfca00a_5
Expenses:
	$fill in the blank 0fc548fecfca00a_7
	fill in the blank 0fc548fecfca00a_9
	fill in the blank 0fc548fecfca00a_11
	fill in the blank 0fc548fecfca00a_13
	fill in the blank 0fc548fecfca00a_15
	fill in the blank 0fc548fecfca00a_17
	fill in the blank 0fc548fecfca00a_19
	fill in the blank 0fc548fecfca00a_21
	fill in the blank 0fc548fecfca00a_23
Total expenses		fill in the blank 0fc548fecfca00a_24
		$fill in the blank 0fc548fecfca00a_26

4b. Prepare a statement of retained earnings for the month ended January 31, 2017. If an amount is zero, enter "0".

Moonlight Bay Inn
Statement of Retained Earnings
For the Month Ended January 31, 2017
	$fill in the blank ce30aff3d00af97_2
	fill in the blank ce30aff3d00af97_4
	fill in the blank ce30aff3d00af97_6
	$fill in the blank ce30aff3d00af97_8

4c. Prepare a balance sheet at January 31, 2017.

Moonlight Bay Inn
Balance Sheet
January 31, 2017
Assets
Current assets:
		$fill in the blank aeceb5fb7f84030_2
		fill in the blank aeceb5fb7f84030_4
		fill in the blank aeceb5fb7f84030_6
Total current assets			$fill in the blank aeceb5fb7f84030_7
Property, plant, and equipment:
	$fill in the blank aeceb5fb7f84030_9
	fill in the blank aeceb5fb7f84030_11	$fill in the blank aeceb5fb7f84030_12
	$fill in the blank aeceb5fb7f84030_14
	fill in the blank aeceb5fb7f84030_16	fill in the blank aeceb5fb7f84030_17
		fill in the blank aeceb5fb7f84030_19
Total property, plant, and equipment			fill in the blank aeceb5fb7f84030_20
Total assets			$fill in the blank aeceb5fb7f84030_21
Liabilities
Current liabilities:
		$fill in the blank aeceb5fb7f84030_23
		fill in the blank aeceb5fb7f84030_25
		fill in the blank aeceb5fb7f84030_27
		fill in the blank aeceb5fb7f84030_29
		fill in the blank aeceb5fb7f84030_31
		fill in the blank aeceb5fb7f84030_33
Total current liabilities			$fill in the blank aeceb5fb7f84030_34
Long-term debt:
			fill in the blank aeceb5fb7f84030_36
Total liabilities			$fill in the blank aeceb5fb7f84030_37
Stockholders' Equity
		$fill in the blank aeceb5fb7f84030_39
		fill in the blank aeceb5fb7f84030_41
Total stockholders' equity			fill in the blank aeceb5fb7f84030_42
Total liabilities and stockholders' equity			$fill in the blank aeceb5fb7f84030_43

5. You are the loan officer at Second State Bank. You have made a loan to Moonlight inn. Upon verifying the financial statements, Which of the statements given below would make you comfortable with the loan you made?

a. The inn has shown a profit, but the balance sheet does not show a strong position. The banker should not be comfortable with the loan made.

b. The inn has shown a profit and the balace sheet shows a strong position.The banker should be comfortable with the loan made.

c. The inn has shown a loss but the balace sheet shows a strong position. The banker should be comfortable with the loan made.

d. The inn has shown a loss and the balace sheet does not show a strong position. The banks should not be comfortable with the loan made.