Question

Stacey's Piano Rebuilding Company has been operating for one year. At the start of the second year, its income statement accounts had zero balances and its balance sheet account balances were as follows:
Cash $ 6,400 Accounts payable $ 9,600
Accounts receivable 32,000 Unearned revenue 3,840
Supplies 1,500 Long-term note payable 48,500
Equipment 9,500 Common stock 1,600
Land 7,400 Retained earnings 11,560
Building 25,300 Additional paid-in capital 7,000

a. Rebuilt and delivered five pianos in January to customers who paid $19,000 in cash.

b. Received a $600 deposit from a customer who wanted her piano rebuilt.

c. Rented a part of the building to a bicycle repair shop; received $850 for rent in January.

d. Received $7,200 from customers as payment on their accounts.

e. Received an electric and gas utility bill for $400 to be paid in February.

f. Ordered $960 in supplies.

g. Paid $2,300 on account in January.

h. Received from the home of Stacey Eddy, the major shareholder, a $920 tool (equipment) to use in the business in exchange for 100 shares of $1 par value stock.

i. Paid $16,500 in wages to employees who worked in January.

j. Declared and paid a $2,200 dividend (reduce Retained Earnings and Cash).

k. Received and paid cash for the supplies in (f).

Required:

Prepare an income statement for January 31 (ignore income taxes). Fill in the letters

STACEY’S PIANO REBUILDING COMPANYIncome Statement (unadjusted)

For the Month Ended January 31

Operating revenues

a)

b)

Total operating revenues: a)

Operating expenses

a)

b)

c)

d)

Total operating expenses: a)

Other item:

a)

b)

c)

Answer 1

Answer:

Net income $2,950

Explanation:

Stacey's piano rebuilding company

Income statement adjusted for the month of January

Operating revenue

Rebuilding fees revenue. $19,000

Total operating revenue. $19,000

Operating expenses

Wages expense. $16,500

Utility expenses. $400

Total operating expenses $16,900

Operating income. $2,100

Other item:

Rent revenue. $850

Net income. $2,950