Question

Prepare the income statement for Damon Design Studio for the year ending December 31, 2018.

Short answer

Income statement is shown as follows:

Damon Design Studio
Income Statement
Year Ended December 31, 2018
Revenues
Service Revenue		$154,600
Expenses
Rent Expense	23,000
Salaries Expense	65,000
Property Tax Expense	2,200
Utilities Expense	7,200
Miscellaneous Expense	3,800
Total Expenses		101,200
Net Income		$53,400

Step-by-step solution

Explanation of income statement

Income statement reports the total revenues , total expenses and net income (loss) for the period.

Calculation of net income

Net income is calculated as follows:

$$\begin{gathered} \mathbf{NetIncome}\mathbf{=}\mathbf{TotalRevenues}-\mathbf{TotalExpenses} \\ \mathbf{=}\mathbf{\$}\mathbf{154}\mathbf{,}\mathbf{600}-\mathbf{\$}\mathbf{101}\mathbf{,}\mathbf{200} \\ \mathbf{=}\mathbf{\$}\mathbf{53}\mathbf{,}\mathbf{400} \end{gathered}$$

Thus, net income is $53,400