Question

Question:Preparing financial statements from the trial balance and calculating the debt ratio

The trial balance as of July 31, 2018, for Sara Simon, Registered Dietician, is presented below:

Account Title Debit Credit

Office Supplies 2,300

Cash 38,000

Accounts Receivable 9,000

Prepaid Insurance 2,400

Equipment 16,000

Accounts Payable 3,000

Unearned Revenue 3,912

Notes Payable 31,000

Common Stock 18,000

Dividends 2,800

Salaries Expense 1,700

Rent Expense 1,100

Utilities Expense 500

Service Revenue 17,888

Total Balance $73,800$ 73,800

Requirements 1. Prepare the income statement for the month ended July 31, 2018.

Short answer

The net income is computed by revenue minus expense and the net income of the business is $14,588

Step-by-step solution

Step-by-step SolutionStep 1: Definition of Net Income

The net income of the business is defined as the revenues of the company less all the expenses incurred during the year.

Preparation of Income Statement

Sara Simon, Registered Dietician
Income statement
July 31, 2018
Particulars	Amount ($)	Amount ($)
Service Revenue		$17,888
Expenses
Salaries Expense	$1,700
Rent Expense	$1,100
Utility Expense	$500
Total Expense		$3,300
Net Income		$14,588