Question

Nicoletti & Parks, CPAs earned fees of $82,000 during the year. For the year, it had the following expenses: Salaries Expense, $40,000; Interest Expense, $1,200; Supplies Expense, $2,300; Insurance Expense, $10,000; Advertising Expense, $2,500; and Depreciation Expense, $3,750. Prepare the income statement if the company has a calendar year-end.

Answer 1

To prepare the income statement for Nicoletti & Parks, CPAs, calculate total expenses and subtract them from the earned fees. Total expenses were $59,750, and after deducting these from the earned fees of $82,000, the accounting profit (Net Income) for the year is $22,250.

Step-by-step explanation:

Income Statement Preparation

To prepare the income statement for Nicoletti & Parks, CPAs with a calendar year-end, you would first need to calculate total expenses and then subtract them from the earned fees to find the net income. Here's how it's done based on the provided information:

Calculating Total Expenses

Total Expenses = Salaries Expense + Interest Expense + Supplies Expense + Insurance Expense + Advertising Expense + Depreciation Expense

= $40,000 + $1,200 + $2,300 + $10,000 + $2,500 + $3,750

= $59,750

Determining Net Income

We then subtract the total expenses from the fees earned:

Net Income = Fees Earned - Total Expenses

= $82,000 - $59,750

= $22,250

This figure represents the accounting profit for Nicoletti & Parks, CPAs for the year.