Chapter 1, Problem 7E

Preparing an Income Statement

Home Realty, Incorporated, has been operating for three years and is owned by three investors. J. Doe owns 60 percent of the total outstanding stock of 9,000 shares and is the managing executive in charge. On December 31, the following financial items for the entire year were determined: sales revenue, $166,000; salaries and wages expense, $97,000; interest expense, $6,300; advertising expenses, $9,025; and income tax expense, $18,500. Also during the year, the company declared and paid the owners dividends amounting to $12,000. Prepare the company’s income statement.