Question

The income statement of Sunland Company for the month of July shows net income of $2,760 based on Service Revenue $7,160, Salaries and Wages Expense $2,730, Supplies Expense $920, and Utilities Expense $750. In reviewing the statement, you discover the following:

1. Insurance expired during July of $480 was omitted.
2. Supplies expense includes $380 of supplies that are still on hand at July 31.
3. Depreciation on equipment of $320 was omitted.
4. Accrued but unpaid wages at July 31 of $310 were not included.
5. Service performed but unrecorded totaled $610.

Answer 1

Question Completion:

Prepare a correct Income Statement for July, 2017.

Answer:

Sunland Company

Corrected Income Statement for July, 2017:

Service Revenue $7,770

Salaries and wages expense $3,040

Supplies expense 540

Utilities expense 750

Insurance expense 480

Depreciation expense 320 (5,130)

Net Income $2,640

Step-by-step explanation:

Required Adjustments:

a) Insurance expense = $480

b) Supplies Expense $920

less Supplies on hand (380)

Supplies Expense $540

c) Depreciation expense = $320

d) Salaries and Wages Expense $2,730

Accrued wages 310

Salaries and Wages Expense $3,040

e) Service Revenue $7,160

Unrecorded services performed $610

Total Service Revenue $7,770