Question

In June, The Forest Ltd. received a $5,000 cash payment for work billed the previous month. During June, the company replanted a clear-cut area of northern Alberta for which it sent out an invoice for $21585. At the beginning of the month the company had $1,000 of trees for planting. During the month the company purchased $4,000 more, and at the end of the month it was left with trees that had cost $500. The company's expenses were $1,000 in rent for its office and $3,000 in other expenses. Amortization on the truck and office equipment was calculated to be $500. The company's expenses were $1000 in rent for its office and $3,000 in other expenses. Amortization on the truck and office equipment was calculated to be $500. The income tax rate is 10%. The revenue for June was:

Answer 1

The Forest Ltd.

The revenue for June was:

$21,585.

Step-by-step explanation:

a) Data:

Cash receipt from customers for May = $5,000

Invoice for June services rendered = $21,585

Beginning inventory of trees = $1,000

Purchases of trees = $4,000

Ending inventory of trees = $500

Cost of trees planted = $4,500

Office rent expense = $1,000

Miscellaneous expenses = $3,000

Depreciation on truck and office equipment = $500

Income tax rate = 10%

Revenue for June = $21,585

b) The revenue of Forest Ltd. for the month of June can be calculated as the number of trees replanted multiplied by the average price of replanting services provided. Assuming that cost of the trees replanted and other expenses incurred are subtracted from the company's revenue, then one arrives at the income before tax. After the deduction of the tax expense for the month, the resulting balance is called the net income or loss.