Prepare an income statement for June.


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Prepare an income statement for June. 1 answer below » Kathy Hoss, a junior in college, has been seeking ways to earn extra spending money. As an active sports enthusiast, Kathy plays tennis regularly at the Racquet Club, where her family has a membership. The president of the club recently approached Kathy with the proposal that she manage the club’s tennis courts. Kathy’s primary duty would be to supervise the operation of the club’s four indoor and six outdoor courts, including court reservations. In return for her services, the club would pay Kathy $150 per week, plus Kathy could keep whatever she earned from lessons and the fees from the use View complete question » Kathy Hoss, a junior in college, has been seeking ways to earn extra spending money. As an active sports enthusiast, Kathy plays tennis regularly at the Racquet Club, where her family has a membership. The president of the club recently approached Kathy with the proposal that she manage the club’s tennis courts. Kathy’s primary duty would be to supervise the operation of the club’s four indoor and six outdoor courts, including court reservations. In return for her services, the club would pay Kathy $150 per week, plus Kathy could keep whatever she earned from lessons and the fees from the use of the ball machine. The club and Kathy agreed to a one-month trial, after which both would consider an arrangement for the remaining two years of Kathy’s college career. On this basis, Kathy organized Advantage. During June 2007, Kathy managed the tennis courts and entered into the following transactions: a. Opened a business account by depositing $1,500. b. Paid $250 for tennis supplies (practice tennis balls, etc.). c. Paid $160 for the rental of videotape equipment to be used in offering lessons during June. d. Arranged for the rental of two ball machines during June for $200. Paid $140 in advance, with the remaining $60 due July 1. e. Received $1,600 for lessons given during June. f. Received $350 in fees from the use of the ball machines during June. g. Paid $600 for salaries of part-time employees who answered the telephone and took reservations while Kathy was giving lessons. h. Paid $150 for miscellaneous expenses. i. Received $600 from the club for managing the tennis courts during June. j. Determined that the cost of supplies on hand at the end of the month totaled $150; therefore, the cost of supplies used was $100. k. Withdrew $500 for personal use on June 30. As a friend and accounting student, you have been asked by Kathy to aid her in assessing the venture. 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: Assets = Liabilities + Owner’s Equity Kathy Kathy Office Accounts Hoss, Hoss, Service Salaries Rent Supplies Misc. Cash + Supplies = Payable + Capital – Drawing + Revenue Expense – Expense – Expense – Expense – 2. Prepare an income statement for June. 3. Prepare a statement of owner’s equity for June. 4. Prepare a balance sheet as of June 30. 5. a. Assume that Kathy Hoss could earn $8 per hour working 30 hours a week as a waitress. Evaluate which of the two alternatives, working as a waitress or operating Advantage, would provide Kathy with the most income per month. b. Discuss any other factors that you believe Kathy should consider before discussing a long-term arrangement with the Racquet Club. View less » Jul 08 2014 12:38 PM

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