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23 March, 09:46

Below are the account balances for Cowboy Law Firm at the end of December. Accounts Balances Cash $ 4,800 Salaries expense 1,900 Accounts payable 2,800 Retained earnings 4,200 Utilities expense 1,200 Supplies 13,200 Service revenue 8,700 Common stock 5,400 Required: Use only the appropriate accounts to prepare an income statement.

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  1. 23 March, 09:54
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    Service revenue $8,700

    Less: Expenses

    Salaries expense $1,900

    Utilities expense $1,200

    Total expense (subtract from Service revenue) - $3100

    Net Income (Service revenue - Total expense) = $5,600

    Explanation:

    First Make the list of given quantities:

    Cash=$4,800

    Salaries expense=$1,900

    Accounts payable=$2,800

    Retained earnings=$4,200

    Utilities expense=$1,200

    Supplies=$13,200

    Service revenue=$8,700

    Common stock=$5,400

    Income statement is as follow:

    Only Service revenue and expenses are used to find the net income.

    Service revenue $8,700

    Less: Expenses

    Salaries expense $1,900

    Utilities expense $1,200

    Total expense (subtract from Service revenue) - $3100

    Net Income (Service revenue - Total expense) = $5,600
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