The Following Are All of the Accounts of Flaherty Company

question 203

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:
$\begin{array}{|l|r|l|r|}\hline \text { Accounts receivable } & \$ 36,000 & \text { Cash } & \$ 27,000 \\\hline \text { Equipment } & 59,000 & \text { Advertising expense } & 5,000 \\\hline \text { Service revenues earmed } & 75,000 & \text { Accounts payable } & 31,000 \\\hline \text { Rent expense } & 3,600 & \text { Dividends } & 24,000 \\\hline \text { Office supplies } & 1,500 & \text { Salaries expense } & 30,000 \\\hline \text { Notes payable } & 22,000 & \text { Common stock } & 20,000 \\\hline & & \text { Retained earnings } & 58,100 \\\hline\end{array}$


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:

Ending Inventory

The total value of all the merchandise, raw materials, work in process, and finished goods that a company has at the end of its fiscal period.

Segmented Income Statement

An income statement that breaks down revenues, expenses, and profits by individual segments, departments, or product lines of a business.

Contribution Format

An income statement format that separates fixed costs from variable costs to highlight the contribution margin of a company's products or services.

Apparel Segment

The apparel segment refers to the portion of a business or market that is focused on the production and sale of clothing and accessories.