The Assets and Liabilities of Rocky's Day Spa at December

question 77

Essay

The assets and liabilities of Rocky's Day Spa at December 31 and expenses for the year are listed below.The stockholders' equity was $68,000 $48,000 in Common Stock and $20,000 in Retained Earnings at January 1.The shareholders invested in an additional $10,000 of common stock during the year.Net income for the year is $45,625.
$\begin{array}{|l|r|l|r}\hline \text { Accounts payable } & \$ 4,375 & \text { Spa operating expense } & \$ 23,760 \\\hline \text { Accounts receivable } & 8,490 & \text { Office expense } & 2,470 \\\hline \text { Cash } & 13,980 & \text { Spa supplies } & 9,230 \\\hline \text { Fees earned } & ? ? ? & \text { Wages expense } & 26,580 \\\hline \text { Spa furniture \& equipment } & 56,000 & \text { Dividends } & 38,170 \\\hline \text { Computers } & 2,130 & & \\\hline\end{array}$ Prepare an income statement for Rocky's Day Spa for the current year ended December 31.

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Definitions:

Materials Requisitions

Requests or orders for company materials to be used in production, indicating types, amounts, and intended use.

Period Cost

Costs that are not directly tied to the production process and are expensed in the period in which they are incurred, such as selling, general, and administrative expenses.

Direct Labor Cost

The wages of factory workers who are directly involved in converting materials into a finished product.

Advertising Costs

Expenses associated with promoting a product, service, or brand to potential customers.