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Horngren'S Financial And Managerial Accounting
Found in: Page 106

Short Answer

Question: Preparing financial statements from the trial balance and calculating the debt ratio

The trial balance as of July 31, 2018, for Sara Simon, Registered Dietician, is presented below:

Account Title Debit Credit

Office Supplies 2,300

Cash 38,000

Accounts Receivable 9,000

Prepaid Insurance 2,400

Equipment 16,000

Accounts Payable 3,000

Unearned Revenue 3,912

Notes Payable 31,000

Common Stock 18,000

Dividends 2,800

Salaries Expense 1,700

Rent Expense 1,100

Utilities Expense 500

Service Revenue 17,888

Total Balance $ 73,800 $ 73,800

Requirements 1. Prepare the income statement for the month ended July 31, 2018.

The net income is computed by revenue minus expense and the net income of the business is $14,588

See the step by step solution

Step by Step Solution

Step-by-step SolutionStep 1: Definition of Net Income

The net income of the business is defined as the revenues of the company less all the expenses incurred during the year.

Step 2: Preparation of Income Statement

Sara Simon, Registered Dietician

Income statement

July 31, 2018

Particulars

Amount ($)

Amount ($)

Service Revenue

$17,888

Expenses

Salaries Expense

$1,700

Rent Expense

$1,100

Utility Expense

$500

Total Expense

$3,300

Net Income

$14,588

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