The amounts of the assets and liabilities of Wilderness Travel Service at April 30, 2014

The amounts of the assets and liabilities of Wilderness Travel Service at April 30, 2014, the end of the current year, and its revenue and expenses for the year are listed below. The capital of Harper Borg, owner, was $180,000 at May 1, 2013, the beginning of the current year, and the owner withdrew $40,000 during the current year.


Accounts payable $ 25,000 Supplies $ 9,000
Accounts receivable 210,000 Supplies expense 12,000
Cash 146,000 Taxes expense 10,000
Fees earned 875,000 Utilities expense 38,000
Miscellaneous expense 15,000 Wages expense 525,000
Rent expense 75,000


Instructions

1. Prepare an income statement for the current year ended April 30, 2014.

2. Prepare a statement of owner’s equity for the current year ended April 30, 2014.

3. Prepare a balance sheet as of April 30, 2014.

4. What item appears on both the income statement and statement of owner’s equity?


Answer:

1. WILDERNESS TRAVEL SERVICE
Income Statement
For the Year Ended April 30, 2014
Fees earned $875,000
Expenses:
Wages expense $525,000
Rent expense 75,000
Utilities expense 38,000
Supplies expense 12,000
Taxes expense 10,000
Miscellaneous expense 15,000
Total expenses 675,000
Net income $200,000
2. WILDERNESS TRAVEL SERVICE
Statement of Owner’s Equity
For the Year Ended April 30, 2014
Harper Borg, capital, May 1, 2013 $180,000
Net income for the year $200,000
Less withdrawals 40,000
Increase in owner’s equity 160,000
Harper Borg, capital, April 30, 2014 $340,000
3. WILDERNESS TRAVEL SERVICE
Balance Sheet
April 30, 2014
Assets Liabilities
Cash $146,000 Accounts payable $ 25,000
Accounts receivable 210,000
Supplies 9,000 Owner’s Equity
Harper Borg, capital 340,000
Total liabilities and
Total assets $365,000 owner’s equity $365,000


4. Net income of $200,000