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Today is December 31, 2018. Today, we started the Hilo Tourism Company. To start the business,...

Today is December 31, 2018. Today, we started the Hilo Tourism Company. To start the business, the owners have invested $25,000 into the business from their own pocket. In addition, the company borrowed $15,000 at a 10 percent simple interest rate. Thus, the company has $40,000 to work with. The company will use $10,000 of this money for operating cash. The company will use the remaining money to purchase a tourism van for $30,000 on December 31st. The company will pay interest only on the loan. The Hilo Tourism Company will contract our services to Royal Cruise Line who has agreed to pay us $160,000 in the year 2019 for providing tours to high-class customers from the Hilo dock to the Volcano. All sales are cash sales. Hilo Tourism Company will have the following expenses in the year 2019. The van will wear out by $5,000 per year. Insurance will cost $12,000 per year. It will cost $20,000 per year for the driver and $16,000 per year for the tour guide. Fuel and repairs combined will cost $40,000 per year. All operating expenses, except depreciation, are cash operating expenses. The company is in a 10 percent tax bracket. One half of the firm’s 2019 net income will be paid out to the owners as a dividend and the other half of the firm’s net income will be retained within the firm. Create an Income Statement for the year ending, December 31, 2019. CREATE ONLY AN INCOME STATEMENT TO ANSWER THIS QUESTION. I WILL ASK YOU TO PRODUCE ADDITIONAL STATEMENTS IN OTHER QUESTIONS

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Answer #1
Hilo Tourism Company
Income Statement For the year ending December 2019
Particulars $ $
Revenue
Contract with Royal Cruise Line 160000
Total Revenue 160000 160000
Operating Expenses
Drivers Salary 20000
Guide Salary 16000
Fuel and Repair 40000
Interest on borrowings 1500
Insurance 12000
Total opreating Expenses(a) 89500
Non Operating Expenses
Depreciation 5000
Total Non Operating Expenses (b) 5000
Total Expenditure(a+b) 94500 94500
Net Income Before Tax 65500
Income Tax @10% 6550
Net Income After Tax 58950
Dividend to owners (50%) 29475
Balance Transferred to Retained Earnings (50%) 29475
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