Question

The income statement of Blossom Company for the month of July shows net income of $3,310 based on Service Revenue $7,210, Salaries and Wages Expense $2,220, Supplies Expense $960, and Utilities Expense $720. In reviewing the statement, you discover the following: 1. Insurance expired during July of $470 was omitted. 2. Supplies expense includes $250 of supplies that are still on hand at July 31. 3. Depreciation on equipment of $250 was omitted. 4. Accrued but unpaid wages at July 31 of $320 were not included. 5. Service performed but unrecorded totaled $710.Prepare a correct income statement for July 2014.

Answer 1

Answer

Blossom Company

Income Statement

for the month of July  

                                                                                       $                        $

Revenues                                      (1)                                                      7,920

Salaries and Wages Expense      (2)                          2,540

Supplies Expense                         (3)                              710

Insurance expense                       (4)                              470

Depreciation Expenses                (5)                              250

Utilities Expense                                                              720

 Total expenses                                                                                     4,690

Adjusted Net Income                                                                              3,230

Explanation

1. Revenues

Revenues per question                                                   $ 7,210

Unrecorded services (Note 5 in question)                     $    710

Adjusted revenues                                                           $ 7,920

2. Salaries and wages Expense

Salaries and wages expenses per question                  $ 2,220

Accrued wages not included (Note 4 in question)       $    320

Adjusted Salaries and wages Expense                         $ 2,540

3. Supplies Expense

Supplies Expenses per question                                     $   960

Supplies on hand to be adjusted ( Note 2 in quest,)      $ (250)

Adjusted Supplies Expenses                                            $ 710

4. Insurance expired to be expenses ( Note 1 in quest,  $ 470      

5. Depreciation to be recorded (Note3 in question)       $ 250