Question

The income statement of Sunland Company for the month of July shows net income of $2,760 based on Service Revenue $7,160, Salaries and Wages Expense $2,730, Supplies Expense $920, and Utilities Expense $750. In reviewing the statement, you discover the following:
1. Insurance expired during July of $480 was omitted.
2. Supplies expense includes $380 of supplies that are still on hand at July 31.
3. Depreciation on equipment of $320 was omitted.
4. Accrued but unpaid wages at July 31 of $310 were not included.
5. Service performed but unrecorded totaled $610.

Answer 1

Question Completion:

Prepare a correct Income Statement for July, 2017.

Answer:

Sunland Company

Corrected Income Statement for July, 2017:

Service Revenue                                   $7,770

Salaries and wages expense  $3,040

Supplies expense                         540

Utilities expense                           750

Insurance expense                       480

Depreciation expense                  320  (5,130)

Net Income                                          $2,640

Explanation:

Required Adjustments:

a) Insurance expense = $480

b) Supplies Expense   $920

less Supplies on hand (380)

Supplies Expense      $540

c) Depreciation expense = $320

d) Salaries and Wages Expense  $2,730

Accrued wages                                   310

Salaries and Wages Expense      $3,040

e) Service Revenue                    $7,160

Unrecorded services performed $610

Total Service Revenue              $7,770