On May 1, Skyline Flying School, a company that provides flying lessons, was started with an investment of $45,000 cash in the business. Following are the assets and liabilities of the company on May 31, 2008, and the revenues and expenses for the month of May.
|
Cash
|
5,600
|
Notes Payable
|
30,000
|
|
Accounts Receivable
|
7,200
|
Rent Expense
|
1,200
|
|
Equipment
|
64,000
|
Repair Expense
|
400
|
|
Lesson Revenue
|
7,500
|
Fuel Expense
|
2,500
|
|
Advertising Expense
|
500
|
Insurance Expense
|
400
|
|
Accounts Payable
|
800
|
|
|
No additional investments were made in May, but the company paid dividends of $1,500 during the month.
Instructions
(a) Prepare an income statement and a retained earnings statement for the month of May and a balance sheet at May 31.
(b) Prepare an income statement and a retained earnings statement for May assuming the following data are not included above: (1) $900 of revenue was earned and billed but not collected at May 31, and (2) $1,500 of fuel expense was incurred but not paid.