Q3. MINICASE Ms. Brown, a self-employed Certified Public Accountant (CPA), completed her first full year in business. During the year, she billed $360,000 for her accounting services on December 31, 2019. She had two employees, a bookkeeper and a clerical assistant. In addition to her monthly salary of $8,000, Ms. Brown paid annual salaries of $48,000 and $36,000 to the bookkeeper and the clerical assistant, respectively. Employment taxes and benefit costs for Ms. Brown and her employees totalled $34,600 for the year. Expenses for office supplies, including postage, totalled $10,400 for the year. In addition, Ms. Brown spent $17,000 during the year on tax-deductible travel and entertainment associated with client visits and new business development. Lease payments for the office space rented (a tax- deductible expense) were $2,700 per month. Depreciation expense on the office furniture and fixtures was $15,600 for the year. During the year, Ms. Brown paid interest of $15,000 on the $120,000 borrowed to start the business. She paid an average tax rate of 30% during 2012. • Prepare an income statement for Ms. Brown, for the year ended December 31, 2019.

Q3. MINICASE Ms. Brown, a self-employed Certified Public Accountant (CPA), completed her first full year in business. During the year, she billed $360,000 for her accounting services on December 31, 2019. She had two employees, a bookkeeper and a clerical assistant. In addition to her monthly salary of $8,000, Ms. Brown paid annual salaries of $48,000 and $36,000 to the bookkeeper and the clerical assistant, respectively. Employment taxes and benefit costs for Ms. Brown and her employees totalled $34,600 for the year. Expenses for office supplies, including postage, totalled $10,400 for the year. In addition, Ms. Brown spent $17,000 during the year on tax-deductible travel and entertainment associated with client visits and new business development. Lease payments for the office space rented (a tax- deductible expense) were $2,700 per month. Depreciation expense on the office furniture and fixtures was $15,600 for the year. During the year, Ms. Brown paid interest of $15,000 on the $120,000 borrowed to start the business. She paid an average tax rate of 30% during 2012. • Prepare an income statement for Ms. Brown, for the year ended December 31, 2019.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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