Prepare an Income Statement and a Statement of Retained Earnings

question 99

Essay

Prepare an income statement and a statement of retained earnings for the month of June. Also, prepare a balance sheet at June 30. The transactions of Modern Designer Corporation for the first month of their operations are as follows:
• On June 1, 2019, Modern Designer Corporation received $25,000 cash from its stockholders and gave common stock to the stockholders.
• The company rendered services to three clients on account with total revenues earned of $9,000.
• It then incurred an advertising expense on four different web sites and promised to pay a total of $1,200 at a later date.
• On June 13, Modern Designer purchased $1,000 worth of office supplies for cash. (The supplies are not used by June 30.)
• On June 22, it received $2,000 on account from a client and deposited it into the business account.
• On June 23, it incurred $1,300 for a legal expense and paid cash.
• On June 30, Modern Designer made a payment of $500 to one of the web sites that it owed for advertising provided earlier in the month.
• No dividends were paid during the month.

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Definitions:

Pleasure-Giving Urge

Denotes an intrinsic motivation or desire to seek activities or stimuli that provide enjoyment, satisfaction, or pleasure.

Defence Mechanisms

Psychological strategies brought into play by individuals, groups, and even nations to cope with realities and to maintain self-image.

Sublimation

A defense mechanism in psychoanalytic theory where socially unacceptable impulses are transformed into socially acceptable actions or behaviors.

Repression

A psychological defense mechanism where distressing thoughts and feelings are unconsciously blocked from conscious awareness.