Question

At January 1 (beginning of its fiscal year), Conover, Inc., a financial services consulting firm, reported the following account balances (in thousands of dollars, except number of shares and par value per share) $ 2,240 Accounts payable Short-term investments Accounts receivable Supplies Prepaid expenses Office equipment Accumulated depreciation-office equipment S 380 1,660 1,210 950 67 7,393 2,520 580 Unearned revenue 4,080 Salaries Payable 320 Short-term note payable 5,400 Common stock ($1 par value) 1,870 Additional paid-in capital (310) Retained earnings a. Received $12,900 cash for consulting services rendered b. Issued 10,340 additional shares of common stock at a market price of $137 per share. c. Purchased $980 of equipment, paying 25 percent in cash and owing the rest on a short-term note d. Received $1,060 from clients for consulting services to be performed in the next year. e. Bought $810 of supplies on account. f. Incurred and paid $2,310 in utilities for the current year. g. Consulted for clients in the current year for fees totaling $1,960, due from clients in the next year. h. Received $6,380 from clients paying on their accounts. i. Incurred $6,550 in salaries in the current year, paying $5,810 and owing the rest (to be paid next year). j. Purchased $1,570 in short-term investments and paid $970 for insurance coverage beginning in the next fiscal year. k. Received $27 in interest revenue eamed in the current year on short-term investments. Required Prepare in good form an income statement for the current year ended December 31. (lgnore income taxes.) (Enter your answer in thousands, not in dollars.)

2.

Answer 1

Solution 1:

Income Statement is as prepared below:

Conover Inc
Income Statement
For the Year Ended December 31
Particulars	Amount ($)	Amount ($)
Operating Revenues:
Consulting Fees Revenue	14,860
Total operating revenues		14,860
Operating Expenses
Utilities Expense	2,310
Salaries Expense	$6,550
Total Operating Expenses		8,860
Operating Income		6,000
Other Item
Interest Revenue	27
Net Income Before taxes		$6,027