Question

The adjusted trial balance for Pharoah Company is given below: PHAROAH COMPANY Trial Balance August 31, 2022 Before Adjustment After Adjustment Dr. Cr. Dr. Cr. Cash $11,540 $11,540 Accounts Receivable 8,570 9,220 Supplies 2,500 1,190 Prepaid Insurance 4,270 2,820 Equipment 16,840 16,840 Accumulated Depreciation—Equipment $3,789 $4,989 Accounts Payable 5,460 5,460 Salaries and Wages Payable 0 1,440 Unearned Rent Revenue 1,870 1,020 Common Stock 14,260 14,260 Retained Earnings 5,570 5,570 Dividends 2,500 2,500 Service Revenue 34,120 34,770 Rent Revenue 13,360 14,210 Salaries and Wages Expense 16,230 17,670 Supplies Expense 0 1,310 Rent Expense 15,979 15,979 Insurance Expense 0 1,450 Depreciation Expense 0 1,200 $78,429 $78,429 $81,719 $81,719 Prepare the income statement for the year ended August 31.

Answer 1

Answer:

Explanation:

In the income statement, the total revenues and the total expenses are recorded.  

If the total revenues are more than the total expenditure then the company earns net income

And, If the total revenues are less than the total expenditure then the company have a net loss

This net income or net loss would reflect in the statement of the retained earning account.  

Before preparing the income statement, we need to calculate the net income or net loss for the given period. The computation is shown below:

=  Service revenue + rent revenue - Salaries and Wages Expense -  Supplies Expense -  Rent Expense  - Insurance Expense - Depreciation Expense

= $34,770 + $14,210 - $17,670 - $1,310 - $15,979 - $1,450 - $1,200

= $11,371

The preparation of the income statement is presented in the spreadsheet. Kindly find the attachment below: