Question

Rescue Records needs rescuing. The downloading of songs and other media are killing its business. The owners of Rescue want to know if they made a net income or a net loss for the year ended December 31. Given the following account balances, prepare an income statement for Rescue similar to Figure 3.1 "Income Statement". Advertising Expense $4,600 Salary Expense $25,470 Cost of Goods Sold $109,000 Sales Revenue $197,000 Income Tax Expense $3,800 Loss on Sale of Stock $12,090 Rent Expense $35,000 NET INCOME

Answer 1

Rescue records Income Statement for Year ended Dec 31, 2XXX 

Revenues:   

Sales revenue $197,000 

Expenses: 

Cost of goods sold  $109,000 

Advertising  $4,600 

Salary  $25,470 

Rent $35,000 

Total expenses:  $174,070 

Operating income:  $22,930 

 

Gains & Losses:   

Loss on truck $12,090 

Income before tax:  $10,840 

Income tax expense:  $3,800 

Net Income:  $7,040 

Answer 2

Answer:

RESCUE

Income Statement

For the year ended december 31

Sales Revenue	$197000
Total Income (A)	$197000
Cost of goods sold	$109000
Advertising Expense	$4600
Salary Expense	$25470
Income Tax Expense	$3800
Loss on sale of stock	$12090
Rent Expense	$35000
Total Expenditures (B)	$189960
Net Income ( A - B )	$7040

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