Question

The amounts of the assets and liabilities of Journey Travel Agency at December 31, 2018, the end of the year, and its revenue and expenses for the year follow. The retained earnings were $1,341,000 on January 1, 2018, the beginning of the year. During the year, dividends of $75,000 were paid.

Accounts payable $ 68,500
Accounts receivable 274,000
Cash 187,500
Common stock 70,000
Fees earned 869,200
Land 544,000
Miscellaneous expense 6,500
Rent expense 40,000
Supplies 5,300
Supplies expense 4,400
Utilities expense 27,000
Wages expense 503,000
Required:
1. Prepare an income statement for the year ended December 31, 2018. Refer to the lists of Accounts, Labels, and Amount Descriptions provided for the exact wording of the answer choices for text entries.

Answer 1

Journey Travel Agency

Income Statement

For the year ended December 31, 2018

Fees earned $869,200

wages expense 503,000

Gross profit $366,200

Operating expenses:

Rent expense 40,000

Utilities expense 27,000

Supplies expense 4,400

Operating income $294,800

Step-by-step explanation:

In preparation of Income statement, we will present all nominal accounts which started from revenue (Fees earned) and deduct all expenses to arrive the operating income. It is important that we never forget the headings consists of Name of the company, What schedule to prepare and what period it is applicable in order for the reader of the statement understands the report well.