Question

Rivera Roofing Company, owned by Reyna Rivera, began operations in July and completed these transactions during that first month of operations.

July 1 Reyna Rivera invested \(80,000 cash in the company in exchange for its common stock.

2 The company rented office space and paid \)700 cash for the July rent.

3 The company purchased roofing equipment for \(5,000 by paying \)1,000 cash and agreeing to pay the \(4,000 balance in 30 days.

6 The company purchased office supplies for \)600 cash.

8 The company completed work for a customer and immediately collected \(7,600 cash for the work.

10 The company purchased \)2,300 of office equipment on credit.

15 The company completed work for a customer on credit in the amount of \(8,200.

17 The company purchased \)3,100 of office supplies on credit.

23 The company paid \(2,300 cash for the office equipment purchased on July 10.

25 The company billed a customer \)5,000 for work completed; the balance is due in 30 days.

28 The company received \(8,200 cash for the work completed on July 15.

30 The company paid an assistant’s salary of \)1,560 cash for this month.

31 The company paid \(295 cash for this month’s utility bill.

31 The company paid \)1,800 cash in dividends to the owner (sole shareholder).

Required 2. Prepare the income statement and the statement of retained earnings for the month of July, and the balance sheet as of July 31

Short answer

The net income is $18,245, closing retained earnings is $16,445 and the total of the balance sheet is $103,545.

Step-by-step solution

Definition of Rent Expense

Rivera Roofing Company
Income Statement
For the month ended July 31
	Amount ($)	Amount ($)
Service Revenue		20,800
Expenses
Rent expense	700
Salary Expense	1,560
Utility expense	295
Total expense		2,555
Net Income		18,245

Preparation of Statement of retained earnings

Rivera Roofing Company
Income Statement
For the month ended July 31
	Amount ($)
Opening Retained Earnings	0
Add: Net Income	18,245
	18,245
Less: Dividends	-1,800
Closing Retained Earnings	16,445

Preparation of Balance Sheet 

Rivera Roofing Company
Balance Sheet
For the month ended July 31
Assets	Amount ($)	Liability	Amount ($)
Cash	87,345	Accounts Payable	7,100
Accounts Receivables	5,000
Office Supplies	3,700	Equity
Office Equipment	2,300	Common stock	80,000
Roofing Equipment	5,000	Retained Earnings	16,445
Total assets	103,545	Total liabilities and equity	103,545