The general ledger of Red Storm Cleaners at January 1, 2018, includes the follow

Question

The general ledger of Red Storm Cleaners at January 1, 2018, includes the following account balances:

   

The following is a summary of the transactions for the year:

March 12 Provide services to customers, $55,000, of which $20,500 is on account.

May 2 Collect on accounts receivable, $17,500.

June 30 Issue shares of common stock in exchange for $4,000 cash.

August 1 Pay salaries, $25,500 (of which $6,000 is for salaries payable in 2017).

September 25 Pay repairs and maintenance expenses, $12,500.

October 19 Purchase equipment for $7,500 cash.

December 30 Pay $1,200 cash dividends to stockholders.

Accrued salaries at year-end amounted to $1,200. Depreciation for the year on the equipment is $4,500. Office supplies remaining on hand at the end of the year equal $1,100.

  Accounts Debits Credits   Cash $ 17,500   Accounts Receivable 7,500   Supplies 3,500   Equipment 12,500      Accumulated Depreciation $ 4,000   Salaries Payable 6,000   Common Stock 22,500   Retained Earnings 8,500        Totals $ 41,000 $ 41,000

7. value: 1.00 points 8-a. Prepare statement for the year ended December 31, 2018. RED STORM CLEANERS Income Statement For the Year Ended December 31, 2018 Accounts payable Accounts receivable Accumulated depreciation Advertising expense Total expenses 0

Explanation / Answer

Income statement :

Revenue Service revenue 55000 Expenses Salary expense (25500-6000+1200) 20700 Repairs and maintenance expense 12500 Depreciation expense 4500 Office supplies expense (3500-1100) 2400 Total expense 40100 Net income (loss) 14900

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