Homework Answers
a.) Preparation of Income Statement
|
Cathy Chen, CPA Income Statement for th eyear ended December 31, 2019 |
||
| Sales revenue (A) | 362,000 | |
| Less: Operating Expense | ||
| Book keeper Salary | 48,500 | |
| Clerical Assistant Salary | 36,100 | |
| Ms. Chen Salary (7,950*12) | 95,400 | |
| Employment Taxes and benefit | 24,800 | |
| Supplies | 10,000 | |
| Travel and Entertainment | 17,400 | |
| Lease Payment (2,650*12) | 31,800 | |
| Depreciation Expense | 15,200 | |
| Total Operating Expenses (B) | (289,200) | |
| Operating Profit (EBIT) (A-B) | 72,800 | |
| Less: Interest | (14,800) | |
| Net proftit before Tax | 58,000 | |
| Less: Tax (58,000*30%) | (17,400) | |
| Net Profit | 40,600 |
b.) Cathey Chen capped all operating expenses and earned a Net Profit of $40,600 on Sales of $362,000 in the first year of business operations.
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