Corlis Custom Builders Designs Decks, Gazebos, and Play Equipment for Residential

question 90

Essay

Corlis Custom Builders designs decks, gazebos, and play equipment for residential homes. The following was provided for the year ended September 30, 2016:
The average design fee is $700. There were 2,000 designs processed during the year.
Required:
a. Prepare a statement of cost of services sold.
b. Prepare an income statement.
c. Discuss three differences between services and tangible products.

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Definitions:

Indirect Method

The indirect method is a way of calculating cash flow from operating activities for the cash flow statement by adjusting net income for changes in non-cash accounts.

Operating Activities

The day-to-day actions that are involved in running a business, such as selling products, managing costs, and paying employees.

Depreciation Expense

The allocation of the cost of a tangible asset over its expected useful life to account for the loss of value over time.

Net Loss

This is the amount by which a company's total expenses exceed its total revenues, indicating that the business has spent more than it has earned during a specific period.