The income statement of Cullumber Company for the month of July shows a net income of $2,600 based on Service Revenue $6,000, Salaries and Wages Expense $2,000, Supplies Expense $1,000, and Utilities Expense $400. In reviewing the statement, you discover the following.

1. Insurance expired during July of $400 was omitted.

2. Supplies expense includes $350 of supplies that are still on hand on July 31.

3. Depreciation on equipment of $350 was omitted.

4. Accrued but unpaid salaries and wages on July 31 of $500 were not included.

5. Services performed but unrecorded totaled $700. Prepare a correct income statement for July 2017.

Question

Business

Kamron Gilmore

13 August, 21:42

The income statement of Cullumber Company for the month of July shows a net income of $2,600 based on Service Revenue $6,000, Salaries and Wages Expense $2,000, Supplies Expense $1,000, and Utilities Expense $400. In reviewing the statement, you discover the following.

1. Insurance expired during July of $400 was omitted.

2. Supplies expense includes $350 of supplies that are still on hand on July 31.

3. Depreciation on equipment of $350 was omitted.

4. Accrued but unpaid salaries and wages on July 31 of $500 were not included.

5. Services performed but unrecorded totaled $700. Prepare a correct income statement for July 2017.

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Hillary Fowler · Answer 1

The preparation correct income statement for July 2017 is presented below:

Cullumber Company

Income statement

For the month of July

Revenue

Service revenue $6,700 ($6,000 + $700)

Total revenues $6,700 (A)

Less: Expenses

Salaries and Wages Expense $2,500 ($2,000 + $500) =

Supplies Expense $650 ($1,000 - $350)

Utilities Expense $400

Insurance expense $400

Depreciation expense $350

Total expenses $4,300 (B)

Net income $2,400 (A - B)