accounting//statement

Question

The assets and liabilities of Rocky's Day Spa at December 31 and its expenses for the year are listed below. The capital of the owner was $68,000 at January 1. The owner invested an additional $10,000 during the year. Net income for the year is $45,625.

Accounts	Amounts	Accounts	Amounts
Accounts payable	$4,375	Spa operating expense	$23,760
Accounts receivable	8,490	Office expense	2,470
Cash	13,980	Spa supplies	9,230
Fees earned	???	Wages expense	26,580
Spa furniture and equipment	56,000	Drawing	38,170
Computers	2,130
Required:
	Prepare an income statement for the current year ended December 31. Refer to the lists of Accounts in the information given, Labels, and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. You will not need to enter colons (:) on the income statement.

Labels
Expenses
For the Year Ended December 31
Amount Descriptions
Net income
Net loss
Total expenses

Answer 1

Capital of $68,000, additional investment of $10,000, Accounts Payable of $4,375, Accounts Receivable of $8,490, Cash of $13,980, Spa furniture and equipment of $56,000, Computers of $2,130, Spa supplies of $9,230, and Drawing of $38,170 are Balance Sheet accounts. This means they won’t appear on the Income Statement. 

Income Statement items are the Fees Earned (which you have to solve for), the three expense accounts (given), and the Net Income (given).

Add your expenses to your Net Income to get your Fees Earned. 

I couldn't post a picture of the Income Statement, but below is close to what it should look like. Bear in mind that books/teachers teach formatting of financials differently. The Income Statement I included may not be formatted the way your book/teach wants it formatted, but the numbers should be accurate.

Hope this helps!

Scott

Rocky's Day Spa

Income Statement

For the Year Ended December 31

Fees Earned $98,435

Expenses

Spa Operating Expenses $23,760

Office Expenses 2,470

Wage Expense 26,580

Total Expenses 52,810

Net Income $45,625