The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2019, the end of the year

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2019, the end of the year, and its revenue and expenses for the year follow. The capital of Ian Eisele, owner, was $670,000 on January 1, 2019, the beginning of the year. During the year, Ian withdrew $42,000.

Accounts payable $ 69,500 

Rent expense $ 36,000

Accounts receivable 285,000 

Supplies 5,500

Cash 190,500 

Supplies expense 4,100

Fees earned 912,500 

Utilities expense 28,500

Land 544,000 

Wages expense 510,000

Miscellaneous expense 6,400

Instructions

1. Prepare an income statement for the year ended December 31, 2019.

2. Prepare a statement of owner’s equity for the year ended December 31, 2019.

3. Prepare a balance sheet as of December 31, 2019.

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

Answer:

1.

Fees earned$912,500

Expenses:

Wages expense$510,000

Rent expense36,000

Utilities expense28,500

Supplies expense4,100

Miscellaneous expense6,400

Total expenses585,000

Net income$327,500

2.

Ian Eisele, capital, January 1, 2019$670,000

Net income for the year$327,500

Withdrawals(42,000)

Increase in owner’s equity285,500

Ian Eisele, capital, December 31, 2019$955,500

3.

Cash$ 190,500

Accounts receivable285,000

Supplies5,500

Land544,000

Total assets$1,025,000

Accounts payable$ 69,500

Ian Eisele, capital955,500

Total liabilities and owner’s equity$1,025,000

4. Ian Eisele, Capital of $955,500