Question

The revenues and expenses of wise Travel Service for the year anded May 31, 2018 Accounts Foes eamed Once expense Miscellaneous expense Wages expense $1,403,000 303.000 32.000 Ever McCauley invested an adonan 45.000 in the business in exchange for common stock and 1.000 of Gudends were paid during the ear n ed a 2011. 2.000 Prepare a renderings for the year ended May 31, 2018 Refer to the decrease to retained eamings should be entered as a gave amount of Label and Amount D ons for the exact ording of the choice antes de su com e t o

Answer 1

The statement of retained earning indicates accumulation of profit or loss till date after deducting dividends during the year.

Net income during the year = Fees earned – (Office expense + Misc. Exp. + Wages)

                                             = 1,403,000 – (303,000 + 32,000 + 854,000)

                                             = 1,403,000 – 1,189,000

                                             = 214,000

Statement of retained earnings

As at 31/05/2018

Accounting heads	Amount
Beginning balance (01/06/2017)	$562,000
Add: Net income during the year	$214,000
Retained earnings available	$776,000
Less: Dividends paid during the year	-$31,000
Ending balance (31/05/2018)	$745,000

Note: Investment in business is a common stock item; therefore, it should not be entered in the retained earnings section.