from the information given, prepare an income statement and a statement of owner

Question

from the information given, prepare an income statement and a statement of owner equity (assuming no additional investments were made by the owner) for the year and also determine the profitibality ratio and evaluate it assuming the industry average is 10%

The Kiein Conpany Adjusted Trial Balance Decenber 31, 2016 ebits Credits 5,000 70,770 2,200 2,500 59,600 Accounts Receivabie offlee Supplie8 Prepaid Insurance otfice Equipnent Acc. Dep'r--oftice Equip Accounts Payable Salaries Parable B111 Klein, Capital Bill Kiein, Withdrawala 26,090 Service Feas Earned Depr Expense--Off, Equip 2,160 Adveristing Expense insurance Expense ofElce Supplies Expense Rent Expense salaries Expense 10,260 14,400 2,700 123,420 540,520 25,000 4,300 480 38,500 454,700 $691,300 691,300

Explanation / Answer

The Klein Company

Income Statement for the year ending December 31, 2016:

Statement of owner's equity for the year ended December 31, 2016:

Profit margin for the company = 15,380 / 540,520 x 100 = 2.85%, whereas industry average is 10%

$ $ Service fees earned 540,520 Less expenses: Salaries expense 454,700 Rent expense 38,500 Office supplies expense 480 Insurance expense 4,300 Advertising expense 25,000 Depreciation expense-Office Equipment 2,160 525,140 Net income 15,380

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