Question 7-8

1/1 Issued 10,000 shares of common stock with a part value of $1 for $510,000. 2/1 Pay $150,000 for equipment, 10 year useful life, straight line depreciation. Assume full year depreciation in year 1. 3/1 Signs a 5-year headquarters lease, paying full amount of $500,000 upfront. 3/15 Deliver services to client and bill in full for $775,000 (client will pay at a later date). 5/1 Purchase $100,000 worth of supplies on credit. By 12/31 $50,000 of supplies are left 8/1 Receive $2,000,000 in advance payment from a client for services that will be performed by Giant Telecom. in 2024. 10/1 Declare $40,000 in dividends to be paid in 2024. 11/1 Purchase $650,000 in inventory. 12/1 Pay $25,000 of the 5/1 purchase of supplies.

7. What is 2023 Net Income (Loss)?

a. $710,000

b. $725,000

c. $626,667

d. $2,710,000

e. None of the above

8. What is end of year retained earnings?

a. $586,667

b. $626,667

c. $0

d. $40,000

e. None of the above