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BUS210 HW1 - Problem 1-3A(a ECKERSLEY SERVICE CO Income...

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Problem 1-3A (a) ECKERSLEY SERVICE CO. Income Statement For the Month Ended June 30, 2010 Revenues Revenue .................................................................................... $7,000 Expenses Wage expense ........................................................................... $1,400 Supplies expense ....................................................................... 1,000 Gas and oil expense .................................................................. 600 Advertising expense .................................................................. 400 Utilities expense ........................................................................ 300 Total expenses ................................................................ 3,700 Net income ........................................................................................ $3,300 ECKERSLEY SERVICE CO. Retained Earnings Statement For the Month Ended June 30, 2010 Retained earnings, June 1 .......................................................................................... ..................................................................................................................... $ 0 Add: Error: Reference source not foundNet income ............................................... ......................................................................................................................... 3,300 3,300 Less: Dividends ......................................................................................................... ......................................................................................................................... 2,000 Retained earnings, June 30 ........................................................................................ ......................................................................................................................... $1,300
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ECKERSLEY SERVICE CO. Balance Sheet June 30, 2010 Assets Cash ................................................................................................... $ 4,600 Accounts receivable ............................................................................. 4,000 Supplies ................................................................................................ 2,400 Equipment ............................................................................................ 29,000 Total assets ................................................................................. $40,000 Liabilities and Stockholders’ Equity Liabilities Notes payable ............................................................................. $12,000 Accounts payable ....................................................................... 500 Total liabilities ................................................................. $12,500 Stockholders’ equity Common stock ........................................................................... 26,200 Retained earnings ....................................................................... 1,300 27,500 Total liabilities and stockholders’ equity ............................. $40,000 (b) Eckersley had a very successful first month, earning $3,300 or a 47% return on revenues of $7,000. Its net income represents a 13% return on the initial investment ($3,300 ÷ $26,200) * 100%.
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(c)
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