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Create an income statement, determine the company's net income for December 2021 and explain.

AAA Co. had the following transactions during the month of December 2021:

New equipment was purchased for P19,000

Revenue for the month was P33,400

Depreciation expense was P2,700

Interest expense on loans outstanding was P880

Administrative and miscellaneous expenses were recorded at P4,700

Income taxes at P2,800

Selling expenses were P1,900

Utility bills of P800 were paid

Salaries of employees for the month totaled P10,000

Raw materials with a cost of P3,700 were received and used.

Respuesta :

akiran007

An income statement is the statement showing the net income which is obtained by subtracting expenses incurred from the revenues generated.

New equipment was purchased for P19,000 is not included in the income statement because this is treated as a capital expense.

Net Income  P 5,920

  • Revenue  is the income which is   P33,400
  • Raw materials used P3,700  is an expense.

All other expenses are also subtracted

  • Depreciation expense  P2,700
  • Utility bills P800
  • Salaries of employees P10,000
  • Interest expense on loans outstanding P880         (14,380)
  • Administrative and miscellaneous expenses    ( P4,700)
  • Selling expenses  (P1,900)
  • Income taxes  P2,800

Solution:

AAA Co.

Income Statement

December 2021:

Revenue for the month  P33,400

less Raw materials used P3,700 .

Gross Profit P29,700

Less other expenses

Depreciation expense  P2,700

Utility bills P800

Salaries of employees P10,000

Interest expense on loans outstanding P880         (14,380)

Less Administrative and miscellaneous expenses   ( P4,700)

Less Selling expenses  (P1,900)

Total Operating Expenses (P20,980)

Income before Tax  P8,720

Income taxes  P2,800

Net Income  P 5,920

The income statement can also be understood from the following.

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