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Chapter 1: Q31E (page 41)

Requirements 1. Prepare the income statement for Wilson Towing Service for the month ending June 30, 2018. 2. What does the income statement report?

Short Answer

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(1) Income statement is shown as follows:

Wilson Towing Service
Income Statement
Year Ended June 30, 2018

Revenues

Service Revenue

$15,000

Expenses

Rent Expense

900

Salaries Expense

2,400

Total Expenses

3,300

Net Income

$11,700

(2) Income statement reports the revenues, expenses and net income (loss) for the period.

Step by step solution

01

Step-by-Step-Solution. Step 1: Calculation of net income

Net income is calculated as follows:

NetIncome=TotalRevenues−TotalExpenses=$15,000−$3,300=$11,700

02

Explanation of net income

Net income is generated when total revenues are higher than the total expenses.

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Most popular questions from this chapter

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