Demonstration problem

Solution


a. GREEN HILLS RIDING STABLE, INCORPORATED
Summary of Transactions
Month of June 2010
Assets = Liabilities + Stockholders Equity
Date Explanation Cash Accounts
Receivable		 Land Accounts
Payable		 Notes
Payable		 Capital +
Stock		 Retained
Earnings
June 1
 Capital stock issued 10,000 = +$10,000
4 Rent expense (1,200)
$(1,200)
$8,800 = +$10,000 $(1,200)
8 Feed expense $800 (800)
$8,800 = $800 +$10,000 $(2000)
15 Boarding fees $3,000 3,000
$8,800 $3,000 = $800 +$10,000 $1,000
20 Miscellaneous expenses
 (600) (600)
$8,200 $3,000 = 800 +$10,000 $400
29 Purchased land by borrowing $40,000
$8,200 $3,000 =
 $800 $40,000 +$10,000 $400
30 Salaries paid (700) $40,000
(700)
$7,500 $3,000 $40,000= $800 $40,000 +$10,000 $(300)
30 Riding and lesson fees billed
2,800 2,800
$7,500 $5,800 $40,000 $800 $40,000 +$10,000 $2,500

b)
GREEN HILLS RIDING STABLE, INCORPORATE
Income Statement
For the Month Ended 2010 June 30
Revenues:
Horse boarding fees revenue $3,000
Riding and lesson fee revenue 2,800
Total revenues
$5,800
Expenses:
Rent expense $1,200
Feed expense 800
Salaries expense 700
Miscellaneous expense 600
Total expenses 3,300
Net income $2,500

c)

GREEN HILLS RIDING STABLE, INCORPORATED
Statement of Retained Earnings
For the Month Ended 2010 June 30
Retained earnings, June 1 $-0-
Add: Net income for June
2,500
Total $2,500
Less: Dividends
 -0-
Retained earnings, June 30 $2,500

d)

GREEN HILLS RIDING STABLE, INCORPORATE
Balance Sheet
2010 June 30
Cash
 $7,500
Accounts receivable   5,800
Land
40,000
Total assets
 $53,300
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable
$800
Noted payable
40,000
Total liabilities
$40,800
Stockholders' equity:
Capital stock
$10,000
Retained earnings
2,500
Total stockholders' equity
 $12,500
Total liabilities and stockholders' equity
 $53,300.00