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.

Question

Business

Jadyn Tyler

1 October, 09:15

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.

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Answers (1)

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Layne Rangel · Answer 1

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