3.Prepare a classified income statement for the month of August in good form. Fo

Question

3.Prepare a classified income statement for the month of August in good form. For the

sake of completeness, assume income tax expense is $146,600.

The following account balances are provided for Stylish Services, Inc. at July 31,2015: Balance Cash Accounts receivable Investment Spare parts and supplies Prepaid insurance Land and Equipment (net) Accounts pavable Interest pavable Salaries payable Unearned revenue Bank loan due October 1,2017 Common stock (no par) Retained earnings $ 250,000 170,000 38,000 40,000 36,000 487,000 84,000 300 36,000 40,000 426,000 350,000 84,700 All August 2015 transactions follow: 1. Provided services on account for a total of $400,000. 2. Customers redeemed gift cards for $20,000 in services. 3. Used S18,000 in parts and supplies. 4. Sold an investment costing $25,000 for $30,000 cash. 5. Paid accounts payable of S55,000. 6. Collected $180,000 on customer accounts. 7. Issued common stock for $75,000. 8. Purchased equipment for S35,000, S15,000 of which was paid in cash. The remainder was on account. 9. Paid $30,000 for August, September and October rent. 10. Paid $76,000 for employee services. $36,000 was for July services and $7,000 was for services to be performed in September. 11. Received a $2,000 bill for August utilities. The bill will not be paid until September. 12. Paid $2,500 for August radio advertisements. 13. Received a $3,000 dividend payment. 14. The prepaid insurance contract expires on January 31, 2016.

Explanation / Answer

Income Statement for August,2015

Aug 2015 Entries 1 Accounts Recievable 400000 To Sales 400000 2 Unearned Revenue 20000 To Sales 20000 3 Spares and Supplies 18000 To Spares and Supplies Inventory 18000 4 Cash 30000 To Investments 25000 To Gain on Sale of Investment 5000 5 Accounts Payable 55000 To Cash 55000 6 Cash 180000 To Accounts Receivable 180000 7 Cash 75000 To Common Stock 75000 8 Equipment 35000 To Cash 15000 To Accounts payable 20000 9 Rent 10000 Prepaid Rent 20000 To Cash 30000 10 Salaries 33000 Prepaid Salaries 7000 Salaries payable 36000 To Cash 76000 11 Utilities 2000 To Outstanding Utilities 2000 12 Advertisements 2500 To Cash 2500 13 Cash 3000 To Dividend 3000 14 Insurance 3000 To prepaid Insurance 3000 15 Interest Payable 300 To Cash 300 16 Interest Expense 300 To Interest Payable 300

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