PR 1-2B Financial statements

The amounts of the assets and liabilities of Wilderness Travel Service at April 30, 2016, the end of the year, and its revenue and expenses for the year follow. The retained earnings was $145,000 at May 1, 2015, the beginning of the year, and dividends of $40,000 were paid during the year.

Accounts payable $ 25,000 

Rent expense $ 75,000

Accounts receivable 210,000 

Supplies 9,000

Cash 146,000 

Supplies expense 12,000

Common stock 35,000 

Taxes expense 10,000

Fees earned 875,000 

Utilities expense 38,000

Miscellaneous expense 15,000 

Wages expense 525,000

Instructions

1. Prepare an income statement for the year ended April 30, 2016.

2. Prepare a retained earnings statement for the year ended April 30, 2016.

3. Prepare a balance sheet as of April 30, 2016.

4. What item appears on both the income statement and retained earnings statement?

Answer:

WILDERNESS TRAVEL SERVICE Income Statement For the Year Ended April 30, 2016 Fees earned $875,000 Expenses: Wages expense $525,000 Rent expense 75,000 Utilities expense 38,000 Supplies expense 12,000 Taxes expense 10,000 Miscellaneous expense 15,000 Total expenses 675,000 Net income $200,000 WILDERNESS TRAVEL SERVICE Retained Earnings Statement For the Year Ended April 30, 2016 Retained earnings, May 1, 2015 $145,000 Net income for the year $200,000 Less dividends 40,000 Increase in retained earnings 160,000 Retained earnings, April 30, 2016 $305,000 WILDERNESS TRAVEL SERVICE Balance Sheet April 30, 2016 Assets Liabilities Cash $146,000 Accounts payable $ 25,000 Accounts receivable 210,000 Supplies 9,000 Stockholders’ Equity Common stock $ 35,000 Retained earnings 305,000 Total stockholders’ equity 340,000 Total liabilities and Total assets $365,000 stockholders’ equity $365,000 4. Net income of $200,000