Question

Home Realty, Incorporated, has been operating for three years and is owned by three investors. J. Doe owns 60 percent of the total outstanding stock of 9,000 shares and is the managing executive in charge. On December 31, the following financial items for the entire year were determined: sales revenue, $166,000; salaries and wages expense, $97,000; interest expense, $6,300; advertising expenses, $9,025; and income tax expense, $18,500. Also during the year, the company declared and paid the owners dividends amounting to $12,000.

Required:
Prepare the company’s income statement.

Answer 1

Net Income for the year is $23,175

Step-by-step explanation:

The Company's income Statement is prepared below. In relation to the following please note that:

• Total Revenue is considered Section A while Total Expense is Section B and the Net Income is the difference of the same (A - B).

Income Statement on December 31st:

HOME REALTY, CORPORATION

Income statement

For period ended December 31st

Revenue $

Sales Revenue 166,000

Other Revenue -

Total Revenue (A) 166,000

Expenses: $

Salaries and Wages Expense 97,000

Interest Expense 6,300

Advertising Expenses 9,025

Income Tax Expense 18,500

Dividends 12,000

Total Expenses (B) 142,825

Net Income (A-B) $23,175