Prepare an income statement and a retained earnings


On May 1, Skyline Flying School, a company that provides flying lessons, was started with an investment of $45,000 cash in the business. Following are the assets and liabilities of the company on May 31, 2008, and the revenues and expenses for the month of May.

Cash

5,600

Notes Payable

30,000

Accounts Receivable

7,200

Rent Expense

1,200

Equipment

64,000

Repair Expense

400

Lesson Revenue

7,500

Fuel Expense

2,500

Advertising Expense

500

Insurance Expense

400

Accounts Payable

800



No additional investments were made in May, but the company paid dividends of $1,500 during the month.

Instructions

(a) Prepare an income statement and a retained earnings statement for the month of May and a balance sheet at May 31.

(b) Prepare an income statement and a retained earnings statement for May assuming the following data are not included above: (1) $900 of revenue was earned and billed but not collected at May 31, and (2) $1,500 of fuel expense was incurred but not paid.

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Cost Accounting: Prepare an income statement and a retained earnings
Reference No:- TGS0807869

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