Question

The amounts of the assets and liabilities of Wilderness Travel Service at April 30, 2018, the end of the year, and its revenue and expenses for the year follow. The retained earnings was $145,000 at May 1, 2017, the beginning of the year, and dividends of $40,000 were paid during the year.
Accounts payable $25,000
Accounts receivable 210,000
Cash 146,000
Common stock 35,000
Fees earned 875,000
Miscellaneous expense 15,000
Rent expense 75,000
Supplies 9,000
Supplies expense 12,000
Taxes expense 10,000
Utilities expense 38,000
Wages expense 525,000

Required:
a. Prepare an income statement for the year ended April 30, 2018.
b. Prepare a retained earnings statement for the year ended April 30, 2018.
c. Prepare a balance sheet as of April 30, 2018.

Answer 1

Answer:

Wilderness Travel Service

a. WILDERNESS TRAVEL SERVICE

Income Statement for the year ended April 30, 2018:

Fees earned                                    875,000

Miscellaneous expense 15,000

Rent expense                75,000

Supplies expense          12,000

Taxes expense              10,000

Utilities expense           38,000

Wages expense         525,000      675,000

Net Income                                   $200,000

Retained Earnings, May 1, 2017   $145,000

b. WILDERNESS TRAVEL SERVICE

Retained Earnings Statement for the year ended April 30, 2018:

Retained Earnings, May 1, 2017     $145,000

Dividends                                          (40,000)

Retained Earnings, May 1, 2018   $305,000

c. WILDERNESS TRAVEL SERVICE

Balance Sheet for the year ended April 30, 2018:

Assets:

Cash                                           $146,000

Accounts receivable                    210,000

Supplies                                           9,000

Total assets                               $365,000

Liabilities + Equity:

Accounts payable                       $25,000

Common stock             35,000

Retained Earnings     305,000  340,000

Total Liabilities + Equity           $365,000

Explanation:

a) Data:

Accounts payable                         $25,000

Accounts receivable    210,000

Cash                             146,000

Common stock                               35,000

Fees earned                                 875,000

Miscellaneous expense 15,000

Rent expense                75,000

Supplies                           9,000

Supplies expense          12,000

Taxes expense              10,000

Utilities expense           38,000

Wages expense         525,000

Retained Earnings, May 1, 2017      145,000

Dividends                     40,000

b) Wilderness Travel Service's Income Statement shows the difference between revenue and expenses, called the net income.  The statement of retained earnings shows the movement in the retained earnings from one period to the next.  And the balance sheet shows the assets and liabilities, including the equity of the company.