Shaws Garden was started on May 1 with an investment of $45,000 cash. Following are the assets, liabilities, and common stock of the company on

Shaw’s Garden was started on May 1 with an investment of $45,000 cash. Following are the assets, liabilities, and common stock of the company on May 31, 2014, and the revenues and expenses for the month of May, its first month of operations.

No additional common stock was issued in May, but a dividend of $1,600 in cash was paid.

Instructions
(a) Prepare an income statement and a retained earnings statement for the month of May and a balance sheet at May 31, 2014.
(b) Briefly discuss whether the company’s first month of operations was a success.
(c) Discuss the company’s decision to distribute adividend.

Notes payable Accounts receivable 8,400 Service revenue Advertising expense Accounts payable Cash Common stock 10,400 1,800 4,400 10,800 45,000 Salaries and wages expense Equipment Maintenance and repairs expense $26,000 1,900 58,800 2,100 400 nsurance expense