Business Insurance Agency Prepares Monthly Financial Statements Additional Data: When the Income Statement Was Prepared the Company

question 246

Essay

Business Insurance Agency prepares monthly financial statements. Presented below is an income statement for the month of June that is correct on the basis of information considered. $\begin{array}{c} \text { BUSINESS INSURANCE AGENCY }\\ \text { Income Statement }\\ \text { For the Month Ended June 30}\\\\\begin{array}{lrr} \text {Revenues } &\\ \text { Sales revenue } &\$36,000\\ \text { Expenses } &\\ \text { Salaries and wages expense } &\$6,500\\ \text { Rent expense} &4,200\\ \text { Depreciation expense } &2,800\\ \text { Advertising expense } &900\\ \text {Total expenses } &&14,400\\ \text { Net income. } &&\$21,600\\\end{array}\end{array}$
Additional Data: When the income statement was prepared the company accountant neglected to take into consideration the following information:
1. A utility bill for $2800 was received on the last day of the month for electric and gas service for the month of June.
2. A company insurance salesman sold a life insurance policy to a client for a premium of $24000. The agency billed the client for the policy and is entitled to a commission of 25%.
3. Supplies on hand at the beginning of the month were $3000. The agency purchased additional supplies during the month for $4000 in cash and $2600 of supplies were on hand at June 30.
4. The agency purchased a new car at the beginning of the month for $31000 cash. The car will depreciate $9000 per year.
5. Salaries owed to employees at the end of the month total $6100. The salaries will be paid on July 5.
Instructions
Prepare a correct income statement.

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Definitions:

Marx

Refers to Karl Marx, a 19th-century philosopher, economist, and social scientist whose work in economics laid the foundation for much of the current understanding of labor and its relation to capital.

Social Contract

The social contract is a theory in political philosophy suggesting that people live together in society in accordance with an agreement that establishes moral and political rules of behavior.

Rousseau

Jean-Jacques Rousseau, an influential 18th-century philosopher known for his contributions to political philosophy, education, and literature.

Looking Glass

A metaphorical concept describing how an individual's self-understanding is shaped by how others perceive them.