Question

The following transactions are July activities of Bill’s Extreme Bowling, Inc., which operates several bowling centers.

(a) Bill’s collected $12,000 from customers for services related to games played in July.
(b) Bill’s billed a customer for $250 for a party held at the center on the last day of July. The bill is to be paid in August.
(c) The men’s and women’s bowling leagues gave Bill’s advance payments totaling $1,500 for the fall season that starts in September.
(d) Bill’s received $1,000 from credit sales made to customers last month (in June).
(e) Bill’s paid $1,500 to plumbers for repairing a broken pipe in the restrooms.
(f) Bill’s paid $2,000 for the June electricity bill and received the July bill for $2,500, which will be paid in August.
(g) Bill’s paid $5,475 to employees for work in July.

Prepare an income statement for Bill’s Extreme Bowling, Inc., for the month ended July 31. (This income statement would be considered "preliminary" because it uses unadjusted balances.)

Answer 1

Income Statement

Sales $12,250

Operating Expenses Electricity -$2,500

Operating Expenses Wages -$5,475

Repairing Expenses -$1,500

Net Income $2,775

Step-by-step explanation:

The income statement is one of the principal financial statement of a company, it's necessary to know if the is generating profit or losses, it keep record of all the transaction during a period of time, but not consider payment or collection made of other period.

This statement apply the accrual criteria, only consider de transaction occurred during the period and not the momento of payment.

In this case the following operations were leaving out becuase are of other period.

• (c) The men’s and women’s bowling leagues gave Bill’s advance payments totaling $1,500 for the fall season that starts in September.

• (d) Bill’s received $1,000 from credit sales made to customers last month (in June).