Question

You are provided with the following information for Pharoah Company, effective as of its April 30, 2022, year-end. Accounts payable $ 846 Accounts receivable 880 Accumulated depreciation—equipment 620 Cash 1,250 Common stock 17,200 Cost of goods sold 1,040 Depreciation expense 415 Dividends 400 Equipment 2,590 Goodwill 1,600 Income tax expense 190 Income taxes payable 125 Insurance expense 210 Interest expense 600 Inventory 980 Investment in land 13,645 Land 2,500 Mortgage payable (long-term) 3,300 Notes payable (short-term) 64 Prepaid insurance 70 Retained earnings (beginning) 1,500 Salaries and wages expense 750 Salaries and wages payable 265 Sales revenue 5,000 Stock investments (short-term) 1,800 Prepare an income statement for Pharoah Company for the year ended April 30, 2022. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answer 1

Step-by-step explanation:

Before preparing the income statement, first, we have to compute the net income or net loss. So, the calculation is shown below:

In the simplest form, the net income = Total revenue - total expenses

= Sales revenue - the cost of good sold - insurance expense - depreciation expense - interest expense - income tax expense - salaries and wages expense

= $5,000 - $1,040 - $210 - $415 - $600 - $190 - $750

= $1,795

The preparation of the income statement is presented in the spreadsheet. Kindly find the attachment below: