Question

On June 1, 2017, Pharoah Company was started with an initial investment in the company of $22,350 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 $5,010 Notes payable $12,820
Accounts receivable 4,290 Accounts payable 790
Service revenue 7,910 Supplies expense 1,030
Supplies 2,370 Maintenance and repairs expense 630
Advertising expense 400 Utilities expense 270
Equipment 26,410 Salaries and wages expense 1,810
Common stock 22,350

In June, the company issued no additional stock but paid dividends of $1,650.

Required:
Prepare an income statement for the month of June.

Answer 1

Pharaoh Company

Income statement

For the year ended June 30, 2017

Revenue & Gains Amount

Service Revenue $7,910

Total revenue & gains (A) $7,910

Expense and losses:

Salaries and wages expense $1,810

Advertising expense $400

Supplies expense $2,370

Utilities expense $270

Maintenance and repair expense $630

Total expense (B) $5,480

Net Income (A - B) $2,430