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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Definitions:

Excise Tax

A tax charged on specific goods, services, and activities, such as gasoline, alcohol, and gambling.

Tax Burden

The impact of taxation on an individual or entity, often measured as a proportion of income or revenue.

Excise Tax

A tax imposed on the sale of specific goods or services, often included in the price of items such as gasoline, alcohol, and tobacco.

Gasoline Supply

The total volume of gasoline available in the market or to consumers, influenced by factors such as crude oil supply, refining capacity, and market demand.