Prepare an income statement with the information listed below: Accumulated Depreciation $ 35,000 Accounts Payable $ 65,000 Advertising Expense $ 20,625 Prepaid Advertising $ 61,875 Common Stock $ 50,000 Depreciation Expense $ 12,500 Dividend Payable $ 50,000 Dividends $ 100,000 Income Tax expense $ 48,000 Income Tax Payable $ 35,000 Interest Expense $ 3,750 Interest Revenue $ 500 Loss on Disposal of Assets $ 10,000 Prepaid Rent $ 56,250 Rent Expense $ 18,750 Retained Earnings $ 836,875 Sales Revenue $ 300,000 Utilities Expense $ 8,750 Utilities Payable $ 7,000 Wage Expense $ 41,250 Wages Payable $ 10,125
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Prepare an income statement with the information listed below:
Accounts Payable $ 65,000
Advertising Expense $ 20,625
Prepaid Advertising $ 61,875
Common Stock $ 50,000
Depreciation Expense $ 12,500
Dividend Payable $ 50,000
Dividends $ 100,000
Income Tax expense $ 48,000
Income Tax Payable $ 35,000
Interest Expense $ 3,750
Interest Revenue $ 500
Loss on Disposal of Assets $ 10,000
Prepaid Rent $ 56,250
Rent Expense $ 18,750
Retained Earnings $ 836,875
Sales Revenue $ 300,000
Utilities Expense $ 8,750
Utilities Payable $ 7,000
Wage Expense $ 41,250
Wages Payable $ 10,125
Step by step
Solved in 2 steps with 2 images
