Question

The income statement of Gopitkumar Co. for the month of July shows net income of $1,400 based on Service Revenue $5,500, Salaries and Wages Expense $2,300, Supplies Expense $1,200, and Utities Expense $600. In reviewing the statement, you discover the following. 1. 2. 3. 4. 5. Insurance expered during July of $400 was omitted Supplies expense includes $250 of supplies that are still on hand at July 31. Depreciation on equipment of $150 was omitted. Accrued but unpaid salaries and wages at July 31 of $300 were not included. Services performed but unrecorded totaled $650. Prepare a correct income statement for July 2020. Gopitkumar Co. Income Statement

Answer 1

Question 1:

Gopitkumar Co.
Income Statement
For the month ended July 31,2020
Revenues:
Service revenue [5,500+650]		$6,150
Expenses:
Salaries and wages expense [2,300+300]	$2,600
Supplies expense [1,200-250]	$950
Utilities expense	$600
Insurance expense	$400
Depreciation expense	$150
Total Expenses		$4,700
Net income		$1,450

Question 2:

Requirement a:

Supplies, January 31	$850
Add: Supplies expense	$950
Supplies, January 1	$1,800

Requirement b:

Total premium	$4,800
Purchase date	August 31,2019

Explanation:

Total premium ($400 x 12 months)	$4,800
Less: prepaid insurance, Jan 31	($2,400)
Total insurance expired	$2,400
÷ insurance expense per month	$400
Insurance expired in months	6

So that premium paid 6 months back from Jan 31. i.e. August 1,2019

Requirement c:

Salaries and wages payable, Dec 31,2019 is $1,400

Explanation:

Salaries and wages paid	$3,500
Add: Salaries and wages payable, Jan 31,2020	$800
(Less): Salaries and Wages expense for Jan	($2,900)
Salaries and wages payable, Dec 31,2019	$1,400