Prepare an Income Statement and a Statement of Retained Earnings

question 12

Essay

Prepare an income statement and a statement of retained earnings for the month of May. Also, prepare a balance sheet as of May 31, 2019, for McGuire Corporation. The financial transactions of McGuire Corporation for the month of May, their first month of operations, are as follows:
• On May 1, 2019, McGuire Corporation issued common stock in exchange for $20,000 cash from a stockholder, Deborah Merchant.
• On May 3, the corporation borrowed $5,000 from a creditor and executed a note payable with the principal and interest to be due in one year.
• On May 7, the corporation purchased $15,000 of equipment for cash.
• On May 8, McGuire Corporation rendered service to a client and received $3,000 in cash.
• On May 12, the corporation incurred a repair expense of $1,800 and promised to pay the repair contractor the following month.
• On May 18, the corporation rendered service to a new client in the amount of $8,000 on account, as the client promised to pay the following month.
• At the end of May, McGuire Corporation distributed cash dividends of $1,500.

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