Question

Analyzing and Reporting Financial Statement Effects of Transactions M.E. Carter launched Carter Company, a professional services firm on March 1. The firm will prepare financial statements at each month-end. In March (its first month), Carter executed the following transactions. a. Carter (owner) invested in the company $300,000 cash and $60,000 in property and equipment. The company issued common stock to Carter. b. The company paid $9,600 cash for rent of office furnishings and facilities for March. c. The company performed services for clients and immediately received $12,000 cash earned. d. The company performed services for clients and sent a bill for $72,000 with payment due within 60 days. e. The company compensated an office employee with $14,400 cash as salary for March. f. The company received $30,000 cash as partial payment on the amount owed from clients in transaction d. g. The company paid $2,805 cash in dividends to Carter (owner). Prepare an income statement for Carter Company for the month of March. Do not use negative signs with your answers unless to indicate a net loss. Carter Company Income Statement For the month ended March 31 Sale revenue Answer 0 Expenses Rent expense Answer 0 Wage expense Answer 0 Answer 0 Net income (loss) Answer 0

Answer 1

Answer:

$18,000

Explanation:

To find the Sales Revenue we simply add the $12,000 cash received immediately, and the $30,000 received as partial payment, totalling $42,000.

Then, we simply complete the proposed income statement:

Income Statement for the Month Ended in March 31

Sales Revenue               $42,000

Rent Expense                  $9,600

Wage Expense                $14,400

Net Income                      $18,000

Net Income is equal to Revenue - expenses.