On May 1, Blue Sky 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, 2014, and the revenues and expenses for the month of May.

No additional investments were made in May, but the company paid dividends of $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 gasoline expense was incurred but notpaid.

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$28,000 1,200 Cash Accounts Receivable Equipment Service Revenue Advertising Expense Accounts Payable 4,500 Notes Payable 7,200 Rent Expense 64,000 Maintenance and 400 2,500 400 6,800 Repairs Expense 500 Gasoline Expense 1,400 Utilities Expense