Question

Neighborhood Realty, Incorporated, has been operating for three years and is owned by three investors. S. Bhojraj owns 60 percent of the total outstanding stock of 9,000 shares and is the managing executive in charge. On December 31, current year, the following financial items for the entire year were determined: commissions earned and collected in cash, $150,900, plus $16,800 uncollected; rental service fees earned and collected, $20,000; salaries expense paid, $62,740; commissions expense paid, $35,330; payroll taxes paid, $2,500; rent paid, $2,475 (not including December rent yet to be paid); utilities expense paid, $1,600; promotion and advertising paid, $7,750; income taxes paid, $24,400; and miscellaneous expenses paid, $500. 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 $12,000.
Complete the following income statement:Income Statement
Revenues:Commissions earned$Rental service fees$Total revenues$Expenses:Salaries expenseCommission expensePayroll tax expenseRent expenseUtilities expensePromotion and advertising expenseMiscellaneous expensesTotal expenses (excluding income taxes)Pretax incomeIncome tax expenseNet income$

Answer 1

Answer:

$50,180

Explanation:

Preparation of Income Statement

NEIGHBORHOOD REALTY, Incorporated Income Statement For the Year Ended December 31,

REVENUE :

Commissions earned$167,700

($150,900+ $16,800)

Rental service fees 20,000

Total revenues $187,700

EXPENSES :

Salaries expense $62,740

Commissions expense $35,330

Payroll taxes $2,500

Rent Expenses $2,700

($2,475/11 month=225)

($2,475+225=$2,700)

Utilities expense $1,600

Promotion and advertising $7,750

Miscellaneous expenses $500

Total expenses (excluding income taxes) $113,120

Pretax income $74,580

($187,700-$113,120)

Income tax expense 24,400

Net income $50,180

($74,580-24,400)

Therefore NEIGHBORHOOD REALTY, Incorporated Income Statement For the Year Ended December 31, NET INCOME will be $50,180