Question

The revenues and expenses of Paradise Travel Service for the year ended May 31, 2018, follow: Accounts Fees earned $809,500 Office expense 295,200 Miscellaneous expense 10,600 Wages expense 450,900 Everett McCauley invested an additional $37,600 in the business in exchange for common stock, and $15,600 of dividends were paid during the year. Retained earnings as of June 1, 2017, was $340,000.

Required:
Prepare a retained earnings statement for the year ended May 31, 2018.

Answer 1

$377,200

Step-by-step explanation:

Preparation for a retained earnings statement for the year ended May 31, 2018

First step is to calculate the Net income

Net income During The Year

Accounts Fees earned $809,500

Less Office expense 295,200

Miscellaneous expense 10,600

Wages expense 450,900

Net Income $52,800

Second step is to calculate the Change In Retained Earnings

Dividends $15,600

Net Income $52,800

Change In Retained Earnings $37,200

($52,800-$15,600)

Now let calculate retained earnings statement

Beginning retained earnings $340,000

Add Change In Retained Earnings $37,200

($52,800-$15,600)

Retained Earning May 31, 2018 $ $377,200

($340,000+$37,200)

Therefore the retained earnings statement for the year ended May 31, 2018 is $377,200