Following are the amounts of the assets and liabilities of Fly Away Travel Agency at December 31, 2004, the end of the current year, and its revenue and expenses for the year.

The retained earnings were $4,500 and the capital stock was $10,000 on January 1, 2004, the beginning of the current year. During the current year, dividends of $30,000 were paid.

Accounts payable

$ 3,200

Accounts receivable

19,500

Cash

7,200

Fees earned

117,480

Miscellaneous expense

1,750

Rent expense

27,000

Prepaid expenses

1,865

Utilities expense

12,365

Wages expense

35,500

Instructions

1. Prepare an income statement for the current year ended December 31, 2004.

2. Prepare a retained earnings statement for the current year ended December 31, 2004.

3. Prepare a balance sheet as of December 31, 2004.