Create a income statement for the journals above Date Accounts Debit Credit 2-Ja

ID: 2546783 • Letter: C

Question

Create a income statement for the journals above

Date Accounts Debit Credit 2-Jan Prepaid Rent 102960 102960 14-Jan Cash 30000 Salaries Payable 30000 25-Jan Cash 48000 Common Stock (Additional Captilal received from stock holders) 14-Feb Supplies 48000 Notes Payable ( Notes Payable @ 10% for period of 6 months) 28-Feb Accounts Recievable Service Revenue 14400 14400 15-Mar Cash 86400 129600 Accounts Recievable Sales Revenue 216000 1-Apr Caslh 248400 Accounts Recievable 248400 3-May Purchases 480000 Accounts Payble 480000 31-May Cash 864000 Unearned Revenue Accounts Recievable 216000 648000 4-Jun Cash 571200 408000 Accounts Recievable Sales Revenue 979200 1-Jul Accounts Payable 456000 456000 14-Aug Notes Payable 48000 Interest Payable 2400

Explanation / Answer

Solution

Income Statement

Particulars

Amount ($)

Service revenue*

1,209,600

Less: Purchases

(480,000)

Gross Profit

729,600

Less: Expenses

Insurance expense

7,920

Bad debt expense

42,000

Salaries expense

360,000

Depreciation expense

14,875

Interest expense

2,000

Sales expense

21,120

(447,915)

Add: Profit on sale of equipment **

9,300

Profit before tax

290,985

Less: Income tax expense

(432,000)

Net Loss

(141,015)

*Service Revenue

=28Feb + 15 Mar+4 Jun

=$ 14,400+$ 216,000+$ 979,200

= $ 1,209,600

**Profit on sale of equipment

Value of equipment at the time of sale

=Book value of equipment - Accumulated depreciation

= $ 66,000-$ 28,800

=$ 37,200

Profit on sale

=Sale price- Value of equipment at the time of sale

= $46,500 - $ 37,200

=$ 9,300