Question

Analyzing Revenues and Expenses and Completing an Income StatementNeighborhood Realty. Incorporated, has been operating forthree years and is owned by three investors. S. Bhojraj owns60 percent of the total outstanding stock of 9.000 shares and is the managing executive in charge, On December 31, 2012,the following financial items for the entire year were determined: commissions earned and collected in cash, $150,900,plus 516.800 uncollected: rental service fees earned and collected. 820.000: salaries expense paid, 562.740: commissionsexpense paid. $35,330; payroll taxes paid, $2,500: rent paid. $1475 (not including December rent yet to be paid): utilitiesexpense paid. $1,600; promotion and advertising paid. $7.750; income taxes paid. $24,400; and miscellaneous expensespaid. 5500 There were no other unpaid expenses at December 31, Also during the year, the company paid the owners'out»of-profit' cash dividends amounting to $12,000, Complete the following income statement:

Answer 1

Answer:

We have two revenues: comissions earned, and rental services fees. The rest of the items are expenses. We simply have to add up all the revenues and all the expenses, and later, substract the expenses from the revenues. Then, we substract the income tax.

Revenues

Commissions $150,900

Rental Fees   $820,000

Total Revenues $970,900

Expenses

Salaries expense $562,740

Commissions expense $35,330

Payroll tax expense $2,500

Rent paid $1,475

Utilities expense $1,600

Promotion and avertising expense $7,750

Miscellaneous expense $5,500

Total Expenses $616,895

Pre-Tax Income = $970,900 - $616,895

                           = $645,005

Income tax paid = $24,400

Net Income = $645,005 - $24,400

                    = $620,605