Financial Statements The amounts of the assets and liabilities of Wilderness Tra

Question

Financial Statements

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.

Required:

1. Prepare an income statement for the year ended April 30, 2018.

2. Prepare a retained earnings statement for the year ended April 30, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign.

3. Prepare a balance sheet as of April 30, 2018. When entering assets, enter them in order of liquidity.

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

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

Explanation / Answer

1)

Wilderness Travel Service

Income Statement

For the Year Ended April 30, 2018

Fees earned

$875000

Expenses:

Miscelleneous expenses

15000

Rent expense

75000

Supplies expense

12000

Tax expense

10000

Utilities expense

38000

Wages expense

525000

Total expenses

$675000

Net Income

$200000

2)

Wilderness Travel Service

Retained Earnings Statement

For the Year Ended April 30, 2018

Retained earnings, May 1, 2017

$145000

Net income

$200000

Dividends

(40000)

$305000

3)

Wilderness Travel Service

Balance Sheet

April 30, 2018

Assets

Accounts receivable

210000

  Cash

146000

Supplies

9000

Total assets

$365000

Liabilities

Accounts payable

$25000

Stockholders' Equity

Common Stock

$35000

Retained Earnings

305000

Total stockholders' equity

340000

Total liabilities and stockholders' equity

$365000

4)

Net income appears on both, the income statement and retained earnings statement.

Wilderness Travel Service

Income Statement

For the Year Ended April 30, 2018

Fees earned

$875000

Expenses:

Miscelleneous expenses

15000

Rent expense

75000

Supplies expense

12000

Tax expense

10000

Utilities expense

38000

Wages expense

525000

Total expenses

$675000

Net Income

$200000

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