The Income Statement Shown Below Was Prepared and Sent by Curtis

question 84

Essay

The income statement shown below was prepared and sent by Curtis Brown, the owner of Curt's Crafts, to several of his creditors. The business is a sole proprietorship that sells crafts and toys. An accountant for one of the creditors looked over the income statement and found that it did not conform to generally accepted accounting principles. Using the following additional information provided by the owner, prepare an income statement in accordance with generally accepted accounting principles. Additional information provided by owner:
1. On December 31, 2014, accounts receivable from customers total $\$ 32,000$ . On
January 1, 2014, accounts receivable totaled $\$ 52,000$ .
2. The beginning and ending merchandise inventories were valued at their
estimated selling price. The actual cost of the ending inventory is estimated to
be $\$ 6,000$ . The actual cost of the beginning inventory is estimated to be $\$ 18,000$ .
3. On December 31, 2014 suppliers of merchandise are owed $\$ 16,000$ . On
January 1, 2014, they were owed $\$ 11,000$ .
4. The owner paid himself a salary of $\$ 1,600$ per month and charged this amount
to the Salaries Expense account.
5. A check for $\$ 300$ to cover the December electric bill on the owner's personal
home was issued from the firm's bank account. This amount was charged to
Utilities Expense.

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Definitions:

Parallel Lines

Lines in a plane that never meet, regardless of how far they are extended in their respective directions.

Depth Perception

The ability to perceive the world in three dimensions (3D) and to judge the distance of objects.

Retinal Images

The projections of visual stimuli onto the retina, where light-sensitive cells convert these stimuli into neural signals for processing by the brain.

Three-Dimensional Perceptions

The ability to perceive the external environment in three dimensions, allowing for the assessment of depth and space.