Question

Below are the account balances for Cowboy Law Firm at the end of December. Accounts Balances Cash $ 4,800 Salaries expense 1,900 Accounts payable 2,800 Retained earnings 4,200 Utilities expense 1,200 Supplies 13,200 Service revenue 8,700 Common stock 5,400 Required: Use only the appropriate accounts to prepare an income statement.

Answer 1

Answer:

Service revenue                                                                   $8,700

Less: Expenses

       Salaries expense                             $1,900

       Utilities expense                              $1,200

Total expense (subtract from Service revenue )             -$3100

Net Income (Service revenue -Total expense)          =      $5,600

Explanation:

First Make the list of given quantities:

Cash=$4,800

Salaries expense=$1,900

Accounts payable=$2,800

Retained earnings=$4,200

Utilities expense=$1,200

Supplies=$13,200

Service revenue=$8,700

Common stock=$5,400

Income statement  is as follow:

Only Service revenue and expenses are used to find the net income.

Service revenue                                                                   $8,700

Less: Expenses

       Salaries expense                             $1,900

       Utilities expense                              $1,200

Total expense (subtract from Service revenue )             -$3100

Net Income (Service revenue -Total expense)          =      $5,600