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Retained Earnings Statement The revenues and expenses of Paradise Travel Service for the year ended May...

Retained Earnings Statement The revenues and expenses of Paradise Travel Service for the year ended May 31, 2018, follow: Fees earned $900,000 Office expense 300,000 Miscellaneous expense 15,000 Wages expense 450,000 Prepare a retained earnings statement for the year ended May 31, 2018. Everett McCauley invested an additional $40,000 in the business in exchange for common stock, and $10,000 of dividends were paid during the year. Retained earnings as of June 1, 2017, were $300,000.

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Answer #1

Paradise Travel Service

Statement of Retained earnings

May 31 2018

beginning balance June 1 2017

$ 300,000.00

Add: Net Income for the year

$ 135,000.00

Less: Cash dividends

$    10,000.00

Ending balance May 31 2018

$ 425,000.00

Paradise Travel Service

Income Statement

May 31 2018

Fee Earned

$ 900,000.00

Less: Expenses

Office Expense

$ 300,000.00

Miscellaneous Expense

$    15,000.00

wages Expense

$ 450,000.00

Net Income for the Year

$ 135,000.00

Notes: Issue of Common stock will increase the value of Common stock and ultimately shareholder's equity but it will not be shown in Statement of Retained earnings.

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