Q42PGA_1
Question
Presented here are the accounts of Hometown Décor Company for the year ended December 31, 2018. Land \( 13,000 Common Stock \) 28,000 Notes Payable 33,000 Accounts Payable 14,000 Property Tax Expense 2,800 Accounts Receivable 800 Dividends 36,000 Advertising Expense 17,000 Rent Expense 14,000 Building 170,400 Salaries Expense 67,000 Cash 2,800 Salaries Payable 1,300 Equipment 17,000 Service Revenue 225,000 Insurance Expense 1,700 Office Supplies 8,000 Interest Expense 6,800 Retained Earnings, Dec. 31, 2017 56,000 Requirements 1. Prepare Hometown Décor Company’s income statement
Step-by-Step Solution
VerifiedIncome statement is shown as follows:
Hometown Décor Company | ||
| Income Statement | ||
| Year Ended December 31, 2018 | ||
Revenues |
|
|
Service Revenue |
| $225,000 |
Expenses |
|
|
Property Tax Expense | $2,800 |
|
Rent Expense | 14,000 |
|
Salaries Expense | 67,000 |
|
Advertising Expense | 17,000 |
|
Insurance Expense | 1,700 |
|
Interest Expense | 6,800 |
|
Total Expenses |
| 109,300 |
Net Income |
| $115,700 |
Net income is calculated as follows:
Net Income = Total Revenues - Total Expenses
= $225,000 - $109,300
= $115,700
In case, total revenues are higher than total expenses, then it results in net income.