Question

The revenues and expenses of Paradise Travel Service for the year ended May 31, 20Y6, follow:

Answer 1

Answer:

Statement of Owners' Equity

For the Year Ended May 31, 20Y6

Common stock account balance June 1, 20Y5                        $60,000

Retained earnings account balance June 1, 20Y5                 $300,000

Common stock issued during the year                                     $40,000

Net income                                                                                $135,000

Subtotal                                                                                      $535,000

Dividends distributed                                                                ($10,000)

Total stockholders' equity                                                        $525,000

• Common stock balance May 31, 20Y6                      $100,000
• Retained earnings balance May 31, 20Y6                $425,000

Explanation:

net profit = $900,000 - $300,000 - $15,000 - $450,000 = $135,000