Question

LOC Normal 1 No Spaci.. 1 No Spaci... Heading 1 AUDUC Adbi AaBbCcl AaBDCD: Aq Heading 2 Title Subtitle Subtle Em... Er Font Paragraph Styles Problem 1-2. K Co. started operation on 1/2/2018. The accounting period is from 1/1/2018 to 12/31/2018, On 1/1/2018, the company's B/S is: cash Inventory 5000 700 B/S Note payable Contributed capital retained earnings 1000 4000 700 total assets 5700 total liabilities and equities 5700 1/1: K. Co. received cash $10000 from owners 2/1: K Co. paid cash 1200 in advance for the one-year (2/1/2018 to 1/31/2019) office lease. 5/1: K. Co purchased three products for resale and paid cash $2100 ($700 per each 7/1: K. Co. sold one item and received cash $750 8/1: K Co. paid cash $1500 for employee wages accrued. 9/1: K. Co. sold one item and received cash $1500 12/31: K. Co made an adjustment for the lease paid on 2/1. Problem 1. Please prepare the income statement for the 2018 year (10 points). OD e @

Answer 1

The required income statement will be prepared as follows:

K Co.
Income Statement
For the Year Ended December 31, 2018
Sales revenue (750 + 1,500)		2,250
Less: Cost of goods sold (700 x 2)		1,400
Gross profit		850
Expenses:
Wages expense	1,500
Rent expense (1,200 x 11/12)	1,100
Total expenses		2,600
Net loss		(1,750)