Reference no: EM13539938

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.