The adjusted trial balance for China Tea Company at December 31, 2018, is presen

Question

The adjusted trial balance for China Tea Company at December 31, 2018, is presented below:

Required:
Prepare an income statement for China Tea Company for the year ended December 31, 2018.

Debit Credit Cash 10,600 Accounts receivable 151,000 Prepaid rent 5,100 Inventory 26,000 Equipment 310,000 Accumulated depreciation - equipment 126,000 Accounts payable 31,000 Notes payable - due in three months 31,000 Salaries payable 4,100 Interest payable 1,100 Common stock 205,000 Retained earnings 52,200 Sales revenue 410,000 Costs of goods sold 185,000 Salaries expense 121,000 Rent expense 16,000 Depreciation expense 31,000 Interest expense 2,100 Advertising expense 2,600 Totals 860,400 860,400

Explanation / Answer

CHINA TEA COMPANY

INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31,2018

Service Revenue

$410000

Cost of goods sold

$185000

Gross Profit

$595000

Expenses:

Salaries Expense

$121000

Rent Expense

16000

Depreciation Expense

31000

Interest Expense

2100

Advertising Expense

2600

(172700)

Net Income

$422300

Service Revenue

$410000

Cost of goods sold

$185000

Gross Profit

$595000

Expenses:

Salaries Expense

$121000

Rent Expense

16000

Depreciation Expense

31000

Interest Expense

2100

Advertising Expense

2600

(172700)

Net Income

$422300

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