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Chapter 1: Q. 12SE (page 35)

Centerpiece Arrangements has just completed operations for the year ended December 31, 2018. This is the third year of operations for the company. The following data have been assembled for the business: Insurance Expense \( 4,500 Salaries Expense \) 46,000 Service Revenue 70,000 Accounts Payable 17,600 Utilities Expense 1,400 Office Supplies 1,700 Rent Expense 16,000 Dividends 4,800 Common Stock 9,000 Accounts Receivable 8,000 Cash 7,200 Equipment 12,100 Retained Earnings, January 1, 2018 5,100

Preparing the income statement Prepare the income statement of Centerpiece Arrangements for the year ended December 31, 2018.

Short Answer

Expert verified
Centerpiece Arrangements

Income Statement

Year Ended December 31, 2018

Revenues

Service Revenue

$70,000

Expenses

Insurance Expense

4,500

Utilities Expense

1,400

Rent Expense

16,000

Salaries Expense

46,000

Total Expenses

67,900

Net Income

$2,100

Step by step solution

01

Explanation of net income

Net income is generated when total revenues are higher than the total expenses

02

Calculation of net income

Net income is calculated as follows :

NetIncome=TotalRevenues-TotalExpenses=$70,000-$67,900=$2,100

Thus, net income is $2,100.

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