Otay Lakes Park is a private camping ground near the Mount Miguel Recreation Are
ID: 2332770 • Letter: O
Question
Otay Lakes Park is a private camping ground near the Mount Miguel Recreation Area. It has compiled the following financial information as of December 31, 2017.
Service revenue (from camping fees)
$132,000
Dividends
$9,000
Sales revenue (from general store)
25,000
Notes payable
50,000
Accounts payable
11,000
Expenses during 2017
126,000
Cash
8,500
Supplies
5,500
Equipment
114,000
Common stock
40,000
Retained earnings (1/1/2017)
5,000
Instructions
(a)
Determine Otay Lakes Park's net income for 2017.
(b)
Prepare a retained earnings statement and a balance sheet for Otay Lakes Park as of December 31, 2017.
(c)
Upon seeing this income statement, Walt Jones, the campground manager, immediately concluded, “The general store is more trouble than it is worth—let's get rid of it.” The marketing director isn't so sure this is a good idea. What do you think?
Service revenue (from camping fees)
$132,000
Dividends
$9,000
Sales revenue (from general store)
25,000
Notes payable
50,000
Accounts payable
11,000
Expenses during 2017
126,000
Cash
8,500
Supplies
5,500
Equipment
114,000
Common stock
40,000
Retained earnings (1/1/2017)
5,000
Explanation / Answer
a. Net income for 2017 = $ ( 132,000 + 25,000) - $ 126,000 = $ 31,000.
b.
c. The income statement is not posted. Hence cannot comment.
Otay Lakes Park Statement of Retained Earnings For the year ended December 31, 2017 Retained Earnings, 1/1/2017 $ 5,000 Add: Net income for 2017 31,000 Less: Dividends (9,000) Retained Earnings, 12/31/2017 $ 27,000Related Questions
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