The Following Are All of the Accounts of Flaherty Company

question 25

Essay

The following are all of the accounts of Flaherty Company that have a balance at the end of August.All accounts have normal balances:
$\begin{array}{|l|r|l|r|}\hline \text { Accounts receivable } & \$ 36,000 & \text { Cash } & \$ 27,000 \\\hline \text { Equipment } & 59,000 & \text { Advertising expense } & 5,000 \\\hline \text { Service revenues earned } & 75,000 & \text { Accounts payable } & 31,000 \\\hline \text { Rent expense } & 3,600 & \text { Dividends } & 24,000 \\\hline \text { Office supplies } & 1,500 & \text { Salaries expense } & 30,000 \\\hline \text { Notes payable } & 22,000 & \text { Common stock } & 20,000 \\\hline & & \text { Retained earnings } & 58,100 \\\hline\end{array}$ a.Calculate net income
b.Determine the amount of retained earnings to be shown on the August 31 balance sheet.

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Definitions:

Product Availability

the extent to which a product is obtainable in the desired quantities at the right time and place for customers.

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.

Cost of Overselling

The expense or loss a company faces when more products are sold than can be supplied, leading to stockouts, potential customer dissatisfaction, and extra costs to fulfill orders.

Unsold Unit

An item that remains in inventory without being purchased by customers.