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Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372 Exercise 39
Analyzing and Interpreting an Income Statement
Three individuals organized Pest Away Corporation on January 1, 2012 to provide insect extermination services. The company paid dividends of $10,000 during the year. At the end of 2012 the first year of operations, the following income statement was prepared:
Required:
1. What was the amount of average monthly revenue
2. What was the average amount of monthly salaries and wages expense
3. Explain why advertising is reported as an expense.
4. Explain why the dividends are not reported as an expense.
5. Can you determine how much cash the company had on December 31, 2012 Answer yes or no, and explain your reasoning.
Three individuals organized Pest Away Corporation on January 1, 2012 to provide insect extermination services. The company paid dividends of $10,000 during the year. At the end of 2012 the first year of operations, the following income statement was prepared:
Required:
1. What was the amount of average monthly revenue
2. What was the average amount of monthly salaries and wages expense
3. Explain why advertising is reported as an expense.
4. Explain why the dividends are not reported as an expense.
5. Can you determine how much cash the company had on December 31, 2012 Answer yes or no, and explain your reasoning.
Explanation
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1.
Calculate the amount of average mont...
Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
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