The balances of Paradise Travel Service’s accounting equation items for the year ended May 31, 2018, are listed below. $10,000 of dividends were paid during the year. Retained earnings as of June 1, 2017, were $300,000.AccountsFees earned $900,000Office expense 300,000Miscellaneous expense 15,000Wages expense 450,000Accounts payable 18,000Accounts receivable 38,000Cash 52,000Common stock 100,000Land 450,000Supplies 3,000Prepare a balance sheet as of May 31, 2018. Refer to the lists of Accounts, Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.

Total Asset = $543,000

Liability = $18,000

Total Equity = $525,000

Note: See the attached for the balance sheet.

Explanation:

Net income = Accounts Fees earned - Office expense - Miscellaneous expense - Wages expense

                    = $900,000 - $300,000 - $15,000 - $450,000  

Net income = $135,000

Ending retained earnings at 31 May 2018 = Retained earnings as of 1 June 2017 + Net Income – Dividend paid

                                                                          = $300,000 + $135,000 - $10,000

Ending retained earnings at 31 May 2018 = $425,000

Paradise Travel Service’s Balance sheet as of May 31, 2018

Using the information above, the Paradise Travel Service’s Balance sheet as of May 31, 2018 is prepared as attached.

In the attached file,  

Total Asset = $543,000

Liability = $18,000

Total Equity = $525,000

Using the Accounting equation bellows:

Asset = Equity – Liability

We have:

$543,000 = $525,000 - $18,000 = $543,000

Therefore, $543,000 = $543,000, which implies the accounting equation holds.

Note: See the attached for the balance sheet.

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