Question

A) On December 31, 2019, Pack N-Deliver Company completed its first year of operations. The following information has been provided for the year:

a. Sold packing supplies for $30,000 and provided $280,000 of delivery services.

b. All packing supplies sales were for cash.

c. Collected $212,000 of delivery service revenue.

d. Paid $15,000 cash to rent packing equipment, with $10,000 for rental in 2019 and the remaining amount for rental in 2020.

e. Spent $4,000 cash to repair delivery equipment during the year.

f. Bought packing supplies at a total cost of $46,000 and paid for $25,000 of these supplies. There were $20,000 of these supplies that have not yet been sold or used.

g. Paid employees $80,000 during the year.

h. Paid $16,000 for advertising for the year.

i. Used $14,000 in fuel for the delivery equipment.

j. Sold investments for $8,000 that had been purchased earlier in the year for $7,000.

k. Ordered $500 in spare parts and supplies.

l. Income tax expense for the year is $18,000.

1) Prepare an accrual basis income statement for Pack-and-Deliver Company for the year ended December 31, 2019.

Answer 1

Net Income		Amount
Revenue
Delivery Services	280000
Packing Supplies	30000	310000
Cost of goods sold
Purchased supples	46000
Less: Closing Inventory	20000	26000
Operating Expenses
Rent	10000
Repair	4000
Salary	80000
Advertisment	16000
Fuel	14000
Supply	500	124500
Operating income		159500
Add: Gain on sale of Investment		1000
Income before taxes		160500
Income taxes expense		18000
Net income		142500