Question

Fees earned $942,135 Office expense 216,690 Miscellaneous expense 18,845 Wages expense 452,225 Accounts payable 23,555 Accounts receivable 65,950 Cash 252,875 Common stock 135,000 Land 301,000 Supplies 11,305 Cash dividends of $35,800 were paid during the year. Retained earnings as of June 1, 20Y5, were $254,000. Prepare the balance sheet as of May 31, 20Y6. When entering assets, enter them in order of liquidity.

Answer 1

Answer and Explanation:

The preparation of the balance sheet as on May 31, 20Y6 is as follows:

Assets

Cash $252,875

Accounts receivable $65,950

Supplies $11,305

Land $301,000

Total Assets $631,130

Liabilities

Accounts payable $23,555

Common Stock $135,000

Retained earnings (see working below) $472,575

Total Liabilities $631,130

Working note

For retained earnings first determine the net loss or net income as the case may be

= Fees earned - office expense - miscellaneous expense - wages expense

= $942,135 - $216,690 - $18,845 - $452,225

= $254,375

Now the ending retained earning balance is

= opening retained earning balance + net income - dividend paid

= $254,000 + $254,375 - $35,800

= $472,575