Reference no: EM132959967

Question - Your uncle Bob owns his own business selling ice cream to local restaurants and has an ice cream stand on the Great Sacandaga Lake. Bob has asked you to create an income statement for his business using the following information.

Bob invested heavily in marketing his business and spent $4,000 on radio advertisements and a variety of print materials. Bob purchased an ice cream machine for $9,000 that he estimated would last 3 years and would have $3,000 salvage value. He also purchased an ice cream truck for $15,000 that would last for 5 years with no salvage value.

At the end of last year (Dec 31st __) he had received $107,000 in cash but was still owed $5,000 from local restaurants and groceries.

After reviewing the company's bank account and your uncles' general ledger you summarize the following expenditures.

Gas Expense $3,000

Prepaid Insurance $3,000 (Paid Jan 1st for 2-years coverage)

Salaries & Wages Expense 35,000

Utilities Expense 2,300

Rent Expense 5,500

Supplies Expense 5,600

Repairs & Maintenance Expense 3,500

Misc. Expense 1,100

Bob keeps $1,500 of supplies as assets in stock to use next year and he had not yet paid Dec's rent that he owed was $500, he also owed his employees $2,000 in wages.

Q1) Using the financial info create your uncles Income Statement for year ended Dec 31st?

Q2) Create the journal entry to accrue $1,500 of supplies, $500 Dec's rent expense and $2,000 in wages.