Financial Accounting: An Integrated Statements Approach, 2nd Edition

The amounts of the assets and liabilities of Chickadee Travel Service at April 30, 2006, the end

of the current year, and its revenue and expenses for the year are listed below. The retained earn-

ings were $35,000, and the capital stock was $15,000 at May 1, 2005, the beginning of the current

year. Dividends of $30,000 were paid during the current year.

Accounts payable $ 12,200

Accounts receivable 31,350

Cash 53,050

Fees earned 263,200

Miscellaneous expense 2,950

Rent expense 37,800

Supplies 3,350

Supplies expense 7,100

Taxes expense 5,600

Utilities expense 22,500

Wages expense 131,700

Instructions

1. Prepare an income statement for the current year ended April 30, 2006.


2. Prepare a retained earnings statement for the current year ended April 30, 2006.


3. Prepare a balance sheet as of April 30, 2006.

The financial statements at the end of Ameba Realty’s first month of operations are shown below.

40 Chapter 1 The Role of Accounting in Business

Problem 1-1A

Income statement, retained

earnings statement, and

balance sheet

Goal 4

Net income: $55,550

Problem 1-2A

Missing amounts from

financial statements

Goal 4

j. $40,440

Ameba Realty

Income Statement

For the Month Ended June 30, 2006

Fees earned $18,800

Operating expenses:

Wages expense $ (a)

Rent expense 1,920

Supplies expense 1,600

Utilities expense 1,080

Miscellaneous expenses 660

Total operating expenses 9,560

Net income $ (b)

ACCOUNTING APPLICATION PROBLEMS

8. Betsy donated several dresses from inventory for a local charity auction for the benefit of
   a women’s abuse shelter.


9. Betsy paid her dues to the YWCA.


10. Lefty paid a breeder’s fee for an English springer spaniel to be used as a hunting guide dog.