Question

The revenues and expenses of Paradise Travel Service for the year ended May 31, 2018, follow:

Accounts Fees earned $1,470,000

Office expense 309,000

Miscellaneous expense 26,000

Wages expense 807,000

Everett McCauley invested an additional $49,000 in the business in exchange for common stock, and $29,000 of dividends were paid during the year. Retained earnings as of June 1, 2017, was $579,000.

Prepare a retained earnings statement for the year ended May 31, 2018. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. “Less” or “Add” is not required. A decrease to retained earnings should be entered as a negative amount.

Answer 1

Answer:

Paradise Travel Service
Statement of Retained Earnings
For the Year Ended May 31,2018
Retained earnings, June 1, 2017		$579,000
Add: Net income*	$328,000
(Less): Cash dividends	($29,000)
Increase in retained earnings		$299,000
Retained earnings, May 31, 2018		$878,000

*Calculations:

Income Statement
Fees earned		$1,470,000
Expenses:
Office expense	$309,000
Miscellaneous expense	$26,000
Wages expense	$807,000
Total expenses		$1,142,000
Net income		$328,000