On May 1. Skyward Flying School Inc.. 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. 2006, and the revenues and expenses for the month of May.

No additional investments were made in May, but dividends of $1,700 were paid 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.

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Cash Accounts Receivable $ 6,500 Notes Payable $30,000 7,200 Rent Expense 1,200 Equipment 64.000 Repair Expense 400 Lesson Revenue 8,600 Fuel Expense 2.500 Advertising Expense 500 Insurance Expense 400 Accounts Payable 800