Question

Presented here are the accounts of Hometown Décor Company for the year ended December 31, 2018. Land \( 13,000 Common Stock \) 28,000 Notes Payable 33,000 Accounts Payable 14,000 Property Tax Expense 2,800 Accounts Receivable 800 Dividends 36,000 Advertising Expense 17,000 Rent Expense 14,000 Building 170,400 Salaries Expense 67,000 Cash 2,800 Salaries Payable 1,300 Equipment 17,000 Service Revenue 225,000 Insurance Expense 1,700 Office Supplies 8,000 Interest Expense 6,800 Retained Earnings, Dec. 31, 2017 56,000 Requirements 1. Prepare Hometown Décor Company’s income statement

Short answer

Income statement is shown as follows:

Hometown Décor Company
Income Statement
Year Ended December 31, 2018
Revenues
Service Revenue		$225,000
Expenses
Property Tax Expense	$2,800
Rent Expense	14,000
Salaries Expense	67,000
Advertising Expense	17,000
Insurance Expense	1,700
Interest Expense	6,800
Total Expenses		109,300
Net Income		$115,700

Step-by-step solution

Calculation of net income

Net income is calculated as follows:

Net Income = Total Revenues - Total Expenses

= $225,000 - $109,300

= $115,700

Explanation of net income

In case, total revenues are higher than total expenses, then it results in net income.