Question

The balances of Paradise Travel Service's accounting equation items for the year ended May 31, 2018, are listed below. 510,000 of dividends were paid during the year. Retained earnings as of June 1, 2017, were $300,000 Accounts Fees earned $900,000 Office expense 300,000 15,000 450,000 Miscellaneous expense Wages expense Accounts payable Accounts receivable Cash 18,000 38,000 52,000 Common stock 100,000

Answer 1

Working Notes:
	Calculation of Net income
		Amount	Amount
	Fees Earned		$           900,000
	Less: Expenses
	Office Expenses	$            300,000
	Miscllaneous Expenses	$               15,000
	Wages Expenses	$            450,000
	Total Expenses		$           765,000
	Net Income		$           135,000
Solution:
	Statement of Retained Earnings
	For the year Ended May 31 2018
		Amount
	Retained Earnings as on June 01, 2017	$            300,000
	Add: Net income of the year	$            135,000
	Total	$            435,000
	Less: Dividend Paids	$               10,000
	Retained Earnings as on May 31, 2018	$            425,000