Question

Required information On January 1, 2021, the general ledger of Dynamite Fireworks includes the following account balances: Credit Accounts Cash Accounts Receivable Supplies Land Accounts Payable Common Stock Retained Earnings Totals Debit $24,900 6,300 4,200 61,000 $ 4,300 76,000 16,100 $96, 400 $96,400 During January 2021, the following transactions occur: January 2 Purchase rental space for one year in advance, $9,300 ($ 775/month). January 9 Purchase additional supplies on account, $4,600. January 13 Provide services to customers on account, $ 26,600. January 17 Receive cash in advance from customers for services to be provided in the future, $4,800. January 20 Pay cash for salaries, $12,600. January 22 Receive cash on accounts receivable, $25,200. January 29 Pay cash on accounts payable, $5, 100. 4. Prepare an income statement for the period ended January 31, 2021.
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Answer 1

DYNAMITE FIREWORKS
Income Statement
For the year ended January 31, 2021
Revenues:
Service revenue	26,600
Total Revenue	$26,600
Expenses:
Rent expense	-775
Salaries expense	-12,600
Total Expenses	-$13,375
Net Income	$13,225

(i) No information has been given about supplies used, hence supplies expense cannot be shown in income statement.

(ii) Cash received in advance from customer for services to be provided in future, is not an income.

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