Question

P1-1 Income statement, retained earnings statement, and balance sheet

The amounts of the assets and liabilities of Glacier Travel Service as of September 30,20 Y 6, the end of the current year, and its revenue and expenses for the year are listed below. The retained earnings were $ 150,000 and the common stock was $ 50,000 as of October 1 , 20Y5, the beginning of the current year. Dividends of $ 10,000 were paid during the year.

Instructions

1. Prepare an income statement for the current year ended September 30,20 Y 6.

2. Prepare a statement of stockholders' equity for the current year ended September 30,20 Y 6.

3. Prepare a balance sheet as of September 30,20 Y 6.

Answer 1

Income statement for the year ended September 30, 2016.

Fees earned		$900,000
Operating expenses
Wages expenses	$425,000
Rent expenses	$180,000
Utilities expenses	$75,000
Supplies expenses	$38,000
Tax expenses	$30,000
Miscellaneous expenses	$37,000
Total operating expenses		($785,000)
Net income		$115,000

Statement of stockholders equity for the year ended September 30, 2016

	Common stock	Retained earnings	Total
Balance as on 1 October	50,000	150,000	200,000
Issuance of common stock	20,000	0	20,000
Net income	0	115,000	115,000
Divided paid	0	(10,000)	(10,000)
Balance as on 30 September	$70,000	$255,000	$325,000

Balance sheet aso of September 30, 2016

Assets
Cash	$166,000
Accounts receivable	$321,000
Supplies	$13,000
Total Assets	$500,000
Liabilities
Accounts payable	$175,000
Stockholders equity
Common stock	$70,000
Retained earnings	$255,000
Total liabilities and stockholders equity	$500,000