Question

On June 1, 2017, Bonita Industries was started with an initial investment in the company of $22,220 cash. Here are the assets, liabilities, and common stock of the company at June 30, 2017, and the revenues and expenses for the month of June, its first month of operations: Cash $ 4,850 Notes payable $12,500 Accounts receivable 4,360 Accounts payable 860 Service revenue 7,750 Supplies expense 1,030 Supplies 2,370 Maintenance and repairs expense 630 Advertising expense 400 Utilities expense 270 Equipment 26,250 Salaries and wages expense 1,650 Common stock 22,220 In June, the company issued no additional stock but paid dividends of $1,520.Prepare an income statement for the month of June.

Answer 1

Answer and Explanation:

The preparation of the income statement is presented below:

Bonita Industries

Income Statement

For the month of June 2017

Revenues

Service Revenue $7,750 (A)

Less: Expenses

Salaries and wages $1,650

Advertising expenses $400

Supplies expense $1,030

Maintenance and repairs expense $630

Utilities expenses $270

Total Expenses $3,980 (B)

Net Income $3,770 (A - B)

We simply deduct all expenses from the revenue earned so that the net income could be determined.