Q23E_1 - Horngren'S Financial And Managerial Accounting

Question

Calculating income and cost per service for a service company 

Buddy Grooming provides grooming services for pets. In April, the company earned \(16,300 in revenues and incurred the following operating costs to groom 660 dogs:

Wages Expense                                        \) 4,061 

Grooming Supplies Expense                    1,675 

Building Rent Expense                                900 

Utilities Expense                                          305 

Depreciation Expense—Equipment          55

Requirements 1. What is Buddy’s operating income for April?

Step-by-Step Solution

Answer

The net operating income for the month of April is $9,304.

Step-by-Step Solution Step 1: Definition of Income Statement

The income statement is defined as the financial statement which shows the revenues and expenses of a business incurred during the year.

Step 2: Preparation of income statement

Income Statement
	Amount ($)	Amount ($)
Revenue
Service Revenue		$16,300
Expenses
Building Rent Expense	$900
Depreciation Expense - Equipment	$55
Grooming Supplies Expense	$1,675
Utilities Expense	$305
Wages Expense	$4,061
Total Expense		$6,996
Operating income		$9,304