Question

Required information

The general ledger of Red Storm Cleaners at January 1, 2021, includes the following account balances:

Accounts	Debits				Credits
Cash	$	12,000
Accounts Receivable		6,400
Supplies		2,400
Equipment		18,000
Accumulated Depreciation					$	6,200
Salaries Payable						8,700
Common Stock						17,000
Retained Earnings						6,900
Totals	$	38,800			$	38,800

The following is a summary of the transactions for the year:

1.		March		12		Provide services to customers, $44,000, of which $19,400 is on account.
2.		May		2		Collect on accounts receivable, $16,400.
3.		June		30		Issue shares of common stock in exchange for $6,000 cash.
4.		August		1		Pay salaries of $8,700 from 2020 (prior year).
5.		September		25		Pay repairs and maintenance expenses, $11,400.
6.		October		19		Purchase equipment for $6,400 cash.
7.		December		30		Pay $1,100 cash dividends to stockholders.

8-a. Prepare the income statement for the year ended December 31, 2021.

Answer 1

Red Storm Cleaners
Income statement for the year ended December 31, 2021
Revenue	Amount $
Service Revenue	44000
Net Revenue	44000
Operating Expenses
Repairs & Maintenance	11400
Operating Income	32600
Other Income	-
Profit Before Taxes	32600
Taxes	-
Profit After Taxes/ Net Profit	32600
Dividend Paid	1100
Retained Earnings	31500

For understanding purpose working note of  General Journal have been provided below:

Date	Particulars	Debit $	Credit $
12 March 2021	Cash A/C -Dr	24600
	Accounts Receivable A/C - Dr	19400
	Service Revenue A/C		44000
	(Being service provided)
02 May 2021	Cash A/C -Dr	16400
	Accounts Receivable A/C		16400
	(being collection from receivables)
30 June 2021	Cash A/C - Dr	6000
	Common Stock		6000
	(Issued common stock in exchange)
01 August 2021	Salaries Payable A/C - Dr	8700
	Cash A/C		8700
	(Being previous years salaries paid)
25 September 2021	Repairs and Maintenance A/C -Dr	11400
	Cash		11400
	(Being expenses paid)
19 October 2021	Equipment A/C	6400
	Cash A/C		6400
	(Being equipment purchased for cash)
30 December 2021	Dividend Paid A/C	1100
	Cash A/C		1100
	(Being dividend paid to common stock holders)

Please feel free to comment if any changes needed or any further information required in the above answer.

Thank you