Question

Income Statement The revenues and expenses of Paradise Travel Service for the year ended May 31, 20Y6, follow: Fees earned $900,000 Office expense 300,000 Miscellaneous expense 15,000 Wages expense 450,000 Prepare an income statement for the year ended May 31, 20Y6. Paradise Travel Service Income Statement For the Year Ended May 31, 20Y6 $ Expenses: $ Total expenses $

Answer 1

Answer:

Net income is $135,000

Explanation:

The below is the Paradise Travel Service Income Statement For the Year Ended May 31, 20Y6 .

Fees earned                                                                      $900,000

less:

Office expense                               $300,000

miscellaneous expense                   $15,000

wages expense                               $450,000

Total expense for the year                                            ($765,000)

Net income                                                                       $135,000  

The net income is computed by deducting office,miscellaneous and wages expenses from the total fees earned during the year,hence the resulting net income thereafter is $135,000.

The net income would be added to opening balance of retained earnings in order to compute the closing retained earnings for the year