Question

Sunland Company, a ski tuning and repair shop, opened on November 1, 2021. The company carefully kept track of all its cash receipts and cash payments. The following information is available at the end of the ski season, April 30, 2022. Cash Receipts Cash Payments Issuance of common shares $19,400 Payment to purchase repair shop equipment $9,240 Rent payments to landlord 1,330 Newspaper advertising payment 370 Utility bill payments 870 Part-time helper’s wage payments 2,350 Income tax payment 11,400 Cash receipts from ski and snowboard repair services 31,300 Subtotals 50,700 25,560 Cash balance 25,140 Totals $50,700 $50,700 The repair shop equipment was purchased on November 1 and has an estimated useful life of 5 years. Lease payments to the landlord are made at the beginning of each month. The part-time helper is owed $465 at April 30, 2022, for unpaid wages. At April 30, 2022, customers owe Sunland Company $390 for services they have received but have not yet paid for. Prepare an accrual-basis income statement for the 6 months ended April 30, 2022.

Answer 1

Sunland Company
Income Statement
For the Six Months Ended April 20, 2022
Revenues:
Service revenue		31690
Expenses:
Depreciation expense	924
Rent expense	1330
Advertising expense	370
Utility expense	870
Wages expense	2815
Income tax expense	11400
Total expenses		17709
Net income		13981

Working:

Service revenue = $31300 + $390 = $31690

Depreciation expense = $9240 x 6/60 = $924

Wages expense = $2350 + $465 = $2815