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 $615,000 on January 1, 2018, the beginning of the year. During the year, dividends of $35,000 were paid.

Accounts payable	$ 73,500
Accounts receivable	288,000
Cash	186,000
Common stock	70,000
Fees earned	875,900
Land	542,000
Miscellaneous expense	6,600
Rent expense	30,000
Supplies	5,100
Supplies expense	4,200
Utilities expense	26,500
Wages expense	511,000

	Required:
1.	Prepare an income statement for the year ended December 31, 2018. Refer to the lists of Accounts, 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 information given and the lists of Accounts, 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 lists of Accounts, 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

• All working forms part of the answer
• Requirement 1

Income Statement
for the year ended Dec 31, 2018
Revenues:
Fees earned		$      875,900.00
Expenses:
Rent expense	$           30,000.00
Supplies expense	$             4,200.00
Utilities expense	$           26,500.00
Wages expense	$        511,000.00
Miscellaneous expense	$             6,600.00
Total Expenses		$      578,300.00
Net Income		$      297,600.00

• Requirement 2

Statement of Retained Earnings
For the year ended 31 Dec 2018
Beginning Balance	$        615,000.00
Net Income	$        297,600.00
Dividends paid	$        (35,000.00)
Ending Balance	$        877,600.00

• Requirement 3

Balance Sheet
31-Dec-18
ASSETS
Cash	$        186,000.00
Accounts receivable	$        288,000.00
Supplies	$             5,100.00
Total Current Assets		$      479,100.00
Land		$      542,000.00
Total Assets		$ 1,021,100.00
LIABILITIES
Accounts payable	$           73,500.00
Total Liabilities		$        73,500.00
STOCKHOLDER's EQUITY
Common Stock	$           70,000.00
Retained Earnings - Ending Balance	$        877,600.00
Total Stockholder's Equity		$      947,600.00
Total Liabilities & Stockholder's Equity		$ 1,021,100.00

• Requirement 4

Item appears on both the retained earnings statement and the balance sheet = Ending balance of Retained Earnings