Home Realty Incorporated, has been operating for three years and is owned by three investors. J. Doe owns 60 percent of the total outstanding stock of 9,000 shares and is the managing executive in charge. On December 31, 2007, the following financial items for the entire year were determined: sales revenue earned and collected in cash, $150,000, plus $16,000 not yet collected; selling expenses paid, $97,000; interest expense paid, $5,775 (not including December interest of $525 yet to be paid); promotion and advertising expenses paid, $9,025; and income tax expense paid, $18,500. There were no other unpaid expenses at December 31. Also during the year, the company declared and paid the owners dividends amounting to $12,000. Complete the following income statement:
Promotion and advertising expenses
Income tax expense
Please see the attached Excel spreadsheet. Revenues
Sales revenue - 150,000
Selling expenses - 97,000
Interest expense - 5,775
Promotion and advertising expenses - 9,025
Income tax expense - 18,500
Net income -19,700
Notes to Student:
I am assuming that the format of this accounting system is on the cash basis as opposed to the accrual basis. ...
The solution analyzes revenues and expenses to complete an income statement for Home Realty Inc.