The account balances of Paradise Travel Service for the year ended May 31, 20Y6, follow: Fees earned $900,000
Office expense 300,000
Miscellaneous expense 15,000
Wages expense 450,000
Accounts payable 18,000
Accounts receivable 38,000
Cash 52,000
Common Stock 100,000
Land 450,000
Supplies 3,000
$10,000 of dividends were paid during the year. Retained earnings as of June 1, 20Y5, were $300,000. Prepare a balance sheet as of May 31, 20Y6. When entering assets, enter them in order of liquidity.

Paradise Travel Service

Balance Sheet as of May 31, 20Y6:

Assets:

Cash                          $52,000

Accounts receivable   38,000

Supplies                        3,000

Land                         450,000

Total assets           $543,000

Liabilities and Equity:

Accounts payable      18,000

Common Stock       100,000

Retained Earnings 425,000

Total liabilities and

 equity                 $543,000

Explanation:

a) Data and Calculations:

Paradise Travel Service

Income Statement for the year ended May 31, 20Y6:

Fees earned                                                   $900,000

Office expense                         300,000

Miscellaneous expense              15,000

Wages expense                       450,000

Total expenses                                                 765,000

Net Income                                                      $135,000

Statement of Retained Earnings for the year ended May 31, 20Y6:

Retained Earnings, June 1, 20Y5  $300,000

Net Income                                        135,000

Dividends                                             10,000

Retained Earnings, May 31, 20Y6 $425,000

b) The balance sheet shows the balances of assets, liabilities and equity at the end of an accounting period.  It derives its name from the accounting equation, which states that assets = liabilities + equity.  This equation implies that the two sides always balance each other.

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total