Answer:
An income statement is a summary of transactions that determine if a Business is profitable or not, during its trading venture.
It outlines revenue being the major income source, the cost of the goods sold, expenses incurred in operating the Business and possible other income.
The result it gives is then recognized as a profit or a loss
Net Profit = $2,525
Net Profit % = Net Profit/Sales
= $2,525/$12,000
= 21.04%
Explanation:
<em>The question is incomplete thus lifted from the internet and you can find it in the attachment</em>
<u>Bills Extreme Bowling Inc.</u>
<u>Preliminary Income Statement</u>
<u>For the Month ended July 31</u>.
Sales $12,000
<u>Other income</u>
Income due for venue rentals $250
<u>Expenses</u>
Plumbing services -$1,500
Electricity Bill -$2,500
Salary -$5,475
Net Profit = $2,525
Net Profit % = Net Profit/Sales
= $2,525/$12,000
= 21.04%
Note (refer to the attachment for the question):
item a is our revenue
item b is income from space rental but which will be paid for in August. So this creates an Account receivable balance against this customer
item C is unearned revenue, it relates to September. The Balance sheet should recognize it as a liability because the service hasn't been rendered yet
Item d is payment for Last months Accounts receivable. This reduces this balance in our Balance sheet
Item e is expense relating to this month
Item f is expense relating to last month and this month, however the last month was paid this month which effectively reduces our Account Payables balance by $2,000. But the $2,500 electricity bill for this month remained outstanding and will be listed in the Balance sheet as a Payable balance and recognized in the income statement as relating to this months expenses
Item g is expense recognized in the year.
