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Why do a split?
4 X 1 split is an operation by which a shareholder now owns 4 shares for each share he/she had before. Logically, the stock market value of each of these new shares is 1/4 of their value before the split. It reduces the price of a share in order to increase liquidity.
Key Insurance agency was organized on September 1, 19¬¬_. Assume that the accounts are closed and financial statement prepared each month. The company occupies rented office space but owns office equipment estimated to have a useful life of 10 years from date of acquisition, September 1. The trial balance for Key Insurance Agency at November 30 is show blew. Cash $3750 Accounts receivable 1210 Office equipment 4800 Accumulated depreciation: office equipment $80 Accounts payable 1640 Capital stock 6000 Retained earnings 1490 Dividends 500 Commissions earned 6220 Advertising expense 800 Salaries expense 3600 Rent expense 770 Total $15430 $15430 Question: A. Prepare the adjusting entry to record depreciation of the office equipment for the month of November. B. Prepare an income statement and a statement of retained earnings for the month ended November 30, 19____, and a balance sheet in report form at November 30, 19_.
Solution: A: Adjusting journal entry: Depreciation Expense: Office Equipment 40 Accumulated Depreciation: office Equipment 40 B: Key Insurance Agency income Statement For the month Ended November 30, 19_ Commissions earned $6220 Expense: Advertising 800 Salaries Expense 3600 Rent Expense 770 Depreciation expense: office equipment 40 5210 Net Income 1010 Key Insurance Agency Statement of Retained Earnings For the Month Ended November 30 19_ Retained earning, Oct 31, 19_ 1490 Net income for the month 1010 Subtotal 2500 Dividends 500 Retained earnings, Nov 30, 19_ 2000 Key Insurance Agency Balance Sheet November 30 19______ Assets Cash 3750 Accounts Receivable 1210 Office Equipment 4800 Less: Accumulated depreciation 120 Total Assets 9640 Liabilities & Stockholders' Equipment Liabilities Accounts payable 1640 Stockholders' equity: Capital Stock 6000 Retained earnings 2000 Total Liabilities & stockholders' equity 9640