Question

The amounts of the assets and liabilities of Journey Travel Agency at December 31, 2018, the end of the year, and its revenue and expenses for the year follow. The retained earnings were $1,341,000 on January 1, 2018, the beginning of the year. During the year, dividends of $75,000 were paid.

Accounts payable	$ 69,500
Accounts receivable	236,500
Cash	190,500
Common stock	450,000
Fees earned	383,500
Land	1,500,000
Miscellaneous expense	14,500
Rent expense	22,500
Supplies	7,000
Supplies expense	11,300
Utilities expense	16,700
Wages expense	170,000

	Required:
1.	Prepare an income statement for the year ended December 31, 2018. Refer to the Accounts given in the Instructions and to the lists of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. If a net loss is incurred, enter that amount as a negative number using a minus sign. A colon (:) will automatically appear if it is required.
2.	Prepare a retained earnings statement for the year ended December 31, 2018. Refer to the Accounts given in the Instructions and to the lists of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. The word “Less” or “Add” is not needed in the Retained Earnings Statement.
3.	Prepare a balance sheet as of December 31, 2018. Refer to the Accounts given in the Instructions and to the lists of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.
4.	What item appears on both the retained earnings statement and the balance sheet?

Answer 1

1. Income Statement:

Particulars	$	$
Fees Earned		383,500
Less: Expenses:
Misc Expenses	14,500
Rent Expense	22,500
Supplies Expense	11,300
Utilities Expense	16,700
Wages Expense	170,000
Total Expenses		235,000
Net Income		148,500

2. Retained Earnings Statement:

Particulars	$
Beginning Balance	1,341,000
Net Income	148,500
Dividends	-75,000
Ending Balance	1,414,500

3. Balance Sheet:

Particulars	$	$
ASSETS:
Current Assets:
Accounts Receivable	236,500
Cash	190,500
Supplies	7,000	434,000
Non Current Assets:
Land	1,500,000	1,500,000
TOTAL ASSETS		1,934,000
LIABILITIES & EQUITY:
Current Liabilities:
Accounts Payable	69,500	69,500
Equity:
Common Stock	450,000
Retained Earnings	1,414,500	1,864,500
TOTAL LIABILITIES & EQUITY		1,934,000

4. Ending Balance of Retained Earnings appear on both the Retained Earnings Statement and the Balance Sheet.