34PGA_1 - Horngren'S Financial And Managerial Accounting

Question

Question: Preparing financial statements from the trial balance and calculating the debt ratio

The trial balance as of July 31, 2018, for Sara Simon, Registered Dietician, is presented below:

Account Title                                       Debit            Credit

 Office Supplies                                 2,300

Cash                                                     38,000

Accounts Receivable                       9,000

Prepaid Insurance                            2,400

Equipment                                        16,000                                                     

Accounts Payable                                                    3,000

Unearned Revenue                                                  3,912

Notes Payable                                                         31,000

Common Stock                                                        18,000

Dividends                                   2,800

Salaries Expense                       1,700

Rent Expense                              1,100  

Utilities Expense                          500 

Service Revenue                                                   17,888

Total Balance                         \( 73,800             \) 73,800

Requirements 1. Prepare the income statement for the month ended July 31, 2018.

Step-by-Step Solution

Answer

The net income is computed by revenue minus expense and the net income of the business is $14,588

Step-by-step Solution Step 1: Definition of Net Income

The net income of the business is defined as the revenues of the company less all the expenses incurred during the year.

Step 2: Preparation of Income Statement

Sara Simon, Registered Dietician
Income statement
July 31, 2018
Particulars	Amount ($)	Amount ($)
Service Revenue		$17,888
Expenses
Salaries Expense	$1,700
Rent Expense	$1,100
Utility Expense	$500
Total Expense		$3,300
Net Income		$14,588