Problem 1-3A

 On May 1, Jeff Wilkins started Skyline Flying School, a company that provides flying lessons, by investing $45,000 cash in the business. Following are the assets and liabilities of the company on May 31, 2010, 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

Jeff Wilkins made no additional investment in May, but he withdrew $1,500 in cash for personal use.

Instructions

(a) Prepare an income statement and owner’s equity statement for the month of May and a balance sheet at May 31.

(b) Prepare an income statement and owner’s equity 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.

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