Answer and Explanation:
The Preparation of the income statement is shown below:-
Nordic Travel Agency
Income Statement
For the year ended December 31, 2016
Particulars Amount
Fees earned $875,900
Less: Expenses
Miscellaneous expense -$6,600
Rent expense -$30,000
Supplies expense -$4200
Utilities expense -$26,500
Wages expense -$511,000
Net income $297,600
2. The Preparation of retained earnings is shown below:-
Nordic Travel Agency
Balance sheet
For the year ended December 31, 2016
Particulars Amount
Balance as on January 1, 2016 $615,000
Add: Net income $297,600
Less: Dividend -$35,000
Balance as on December 31, 2016 $877,600
3. The Preparation of balance sheet is shown below:-
Nordic Travel Agency
Balance sheet
For the year ended December 31, 2016
Assets: Amount
Current Assets
Accounts receivable $288,000
Cash $186,000
Supplies $5,100
Total Current Assets $479,100
Land $542,000
Total Assets $1,021,100
Liabilities
Accounts payable $73,500
Total Liabilities $73,500
Equity
Common stock $70,000
Retained Earnings $877,600
Total Equity $947,600
Total Liabilities and Equity $1,021,100
4. The retained earnings should be displayed both in the retained earnings statement and the balance sheet
