Question

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2016, the end of the year, and its revenue and expenses for the year follow. The retained earnings were $640,000 on January 1, 2016, the beginning of the year. During the year, dividends of $43,000 were paid.

Accounts payable	$ 65,500
Accounts receivable	264,000
Cash	180,500
Common stock	70,000
Fees earned	849,200
Land	541,000
Miscellaneous expense	6,900
Rent expense	32,000
Supplies	5,200
Supplies expense	4,100
Utilities expense	28,000
Wages expense	520,000

	Required:
1.	Prepare an income statement for the year ended December 31, 2016. 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, 2016. 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. Enter all amounts as positive numbers. The word “Less” or “Add” is not needed in the Retained Earnings Statement.
3.	Prepare a balance sheet as of December 31, 2016. 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

1. Income Statement

Nordic Travel Agency
Income Statement
For the Year Ended December 31, 2016
Particulars	Amount ($)	Amount ($)
Fees Earned	849,200
		849,200
Less: Expenses
Miscellaneous Expense	6,900
Rent Expense	32,000
Supplies Expense	4,100
Utilities Expense	28,000
Wages Expense	520,000
Total expenses		591,000
Net income		258,200

2. Retained earning

Nordic Travel Agency
Retained Earning Statement
For the Year Ended December 31, 2016
Particulars	Amount ($)	Amount ($)
Retained Earnings		640,000
Net income	258,200
Dividends	43,000
Retained earnings, January 31		855,200

3. Balance Sheet

Nordic Travel Agency
Budgeted Balance Sheet
As at December 31, 2016
Particulars	Amount ($)	Amount ($)
ASSETS
Current Assets:
Cash	180,500
Accounts Receivable	264,000
Supplies	5,200
Total Current Assets		449,700
Land		541,000
Total Assets		990,700
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities :
Current Liabilities
Accounts Payable	65,500
Total Current Liabilities		65,500
Total Stockholders' Equity
Common Stock	70,000
Retained Earnings	855,200
Total Stockholders' Equity		925,200
Total Liabilities and stockholders’ equity		990,700

4. Items that appear on both Retained earning statement and balance sheet is the closing balance of Retained Earning which comprise of net income and dividend.