Below Is the Adjusted Trial Balance for Parsons Repair Service

question 48

Essay

Below is the adjusted trial balance for Parsons Repair Service.Please prepare the income statement for the year ended December 31,2012.
Parsons Repair Service
Adjusted Trial Balance
December 31,2012
$\begin{array}{|l|r|r|}\hline\text { Accounts } & \text { Debit } & \text { Credit } \\\hline \text { Cash } & \$ 1,600 &\\\hline \text { Accounts receivable } & 2,400 \\\hline \text { Prepaid rent } & 800 \\\hline \text { Supplies } & 200 \\\hline \text { Building } & 14,000\\\hline \text { Accumulated depreciation } & & \$ 2,000 \\\hline \text { Accounts payable } & & 4,200 \\\text { Salary payable } & & 1,000 \\\hline \text { Unearned revenue } & & 800 \\\hline \text { D. Parsons, capital } & & 6,000 \\\hline \text { D. Parsons, drawing } & 1,000 \\\hline \text { Service revenue } &&50,000 \\\hline \text { Salary expense } & 21,000 \\\hline\text { Rent expense } & 14,000 \\\hline \text { Depreciation expense } & 8,500 \\\hline \text { Supplies expense } & 500 \\\hline \text { Total } & \$ 64,000& \$ 64,000\\\hline\end{array}$

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Definitions:

Cost of Goods Sold

The expenses directly tied to the creation of the products sold by a business.

Collections

The process of pursuing payments of debts owed by individuals or businesses, typically involving accounts receivable.

Accounts Receivable

The money owed to a company by its customers for goods or services delivered but not yet paid for.

Credit Sales

Sales made by a business where payment is deferred, allowing the customer to pay at a later date.