Question

Income Statement, Retained Earnings Statement, and Balance Sheet

The following are the amounts of the assets and liabilities of New World Travel Agency at December 31, 20Y6, the end of the current year, and its revenue and expenses for the year. The retained earnings were $51,150 on January 1, 20Y6, the beginning of the current year. During the current year, dividends of $25,100 were paid.

Accounts payable	$17,240
Accounts receivable	107,290
Capital stock	15,000
Cash	186,310
Fees earned	673,000
Miscellaneous expense	5,510
Rent expense	91,860
Supplies	8,030
Supplies expense	14,700
Utilities expense	55,120
Wages expense	262,470

Instructions:

Hide 1. Prepare an income statement for the current year ended December 31, 20Y6.

2. Prepare a retained earnings statement for the current year ended December 31, 20Y6.

3. Prepare a balance sheet as of December 31, 20Y6. When entering assets, enter them in order of liquidity.

Answer 1

Answer

• Requirement 1

Income Statement
for the year ended 31 Dec 20Y6
Revenues:
Fees earned		$673,000
Expenses:
Miscellaneous expense	$5,510
Rent expense	$91,860
Supplies expense	$14,700
Utilities expense	$55,120
Wages expense	$262,470
Total expense		$429,660
Net Income		$243,340

• Requirement 2

Statement of Retained earnings
for the year ended 31 Dec 20Y6
Beginning balance		$51,150
Add: Net Income	$243,340
Less: Dividends	$25,100
		$218,240
Ending Balance - 31 Dec 20Y6		$269,390

• Requirement 3

Balance Sheet
at 31 Dec 20Y6
ASSETS
Cash	$186,310
Accounts receivable	$107,290
Supplies	$8,030
Total Assets		$301,630
LIABILITIES
Accounts payable		$17,240
STOCKHOLDER's EQUITY
Capital stock	$15,000
Retained Earnings	$269,390
Total Stockholder' Equity		$284,390
Total Liabilities & Stockholder's Equity		$301,630