Solution Manual For Accounting Principles, 13th Edition

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Weygandt,Accounting Principles,13/e,Solutions Manual1-1CHAPTER 1Accounting in ActionASSIGNMENT CLASSIFICATION TABLELearning ObjectivesQuestionsBriefExercisesDo It!ExercisesAProblems1.Identify the activities andusers associated withaccounting.1, 2, 3, 4, 511, 22.Explain the building blocks ofaccounting: ethics, principles,and assumptions.6, 7, 8, 9, 1023, 43.State the accountingequation, and define itscomponents.11, 12, 13, 221, 2, 3, 4, 5,6,351A4.Analyze the effects ofbusiness transactions on theaccounting equation.14, 15, 16, 187, 8, 946, 7, 81A, 2A, 4A,5A5.Describethe four financialstatements and how they areprepared.17, 19, 20, 2110, 1159, 10, 11, 12,13, 14, 15, 16,17, 182A, 3A, 4A,5A*6Explain the careerOpportunities in accounting.

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1-2Weygandt,Accounting Principles,13/e,Solutions ManualASSIGNMENT CHARACTERISTICS TABLEProblemNumberDescriptionDifficultyLevelTime Allotted(min.)1AAnalyze transactions and compute net income.Moderate40–502AAnalyze transactions and prepare income statement,owner’s equity statement, and balance sheet.Moderate50–603APrepare income statement, owner’s equity statement, andbalance sheet.Moderate50–604AAnalyze transactions and prepare financial statements.Moderate40–505ADetermine financial statement amounts and prepareowner’s equity statement.Moderate40–50

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Weygandt,Accounting Principles,13/e,Solutions Manual1-3ANSWERS TO QUESTIONS1.Yes, this is correct. Virtually every organization and person in our society uses accountinginformation. Businesses, investors, creditors, government agencies, and not-for-profit organizationsmust use accounting information to operate effectively.LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: NoneAICPA FC: Reporting2.Accounting is the process of identifying, recording, and communicating the economic events ofan organization to interested users of the information. The first step of the accounting process istherefore to identify economic events that are relevant to a particular business. Once identifiedand measured, the events are recorded to provide a history of the financial activities of theorganization. Recording consists of keeping a chronological diary of these measured events in anorderly and systematic manner. The information is communicated through the preparation anddistribution of accounting reports, the most common of which are called financial statements.A vital element inthe communication process is the accountant’s ability and responsibility toanalyze and interpret the reported information.LO1 BT: C Difficulty: Easy TOT:4min. AACSB: None AICPA FC: Reporting3.(a)Internal users are those who plan, organize, and run the business and therefore are officersand other decision makers.(b)To assist management, managerial accounting provides internal reports. Examples includefinancialcomparisons ofoperatingalternatives, projections ofincome fromnewsalescampaigns, and forecasts of cash needs for the next year.LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting4.(a)Investors (owners) use accounting information to make decisions to buy, hold, or sell owner-ship shares of a company.(b)Creditors use accounting information to evaluate the risks of granting credit or lending money.LO1 BT: C Difficulty: EasyTOT: 2 min. AACSB: None AICPA FC: Reporting5.No, this is incorrect.Bookkeeping usually involves only the recording of economic events andtherefore is just one partof the entire accounting process. Accounting, on the other hand, involvesthe entire process of identifying, recording, and communicating economic events.LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting6.BentonTravel Agency should report the land at $90,000 on its December 31,2020balancesheet. This is true not only at the time the land is purchased, but also over the time the land isheld. In determining which measurement principle to use (cost or fair value) companies weigh thefactual nature of cost figures versus the relevance of fair value. In general, companies use cost.Only in situations where assets are actively traded do companies apply the fair value principle.An important concept that accountants follow is the historical cost principle.LO2 BT: C Difficulty: Easy TOT: 4 min. AACSB: None AICPA FC: Reporting7.The monetary unit assumption requires that only transaction data that can be expressed in termsof money be included in the accounting records. This assumption enables accounting to quantify(measure) economic events.LO2 BT:K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting8.The economic entity assumption requires that the activities of the entity be kept separate anddistinct from the activities of its owners and all other economic entities.LO2 BT: KDifficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting

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1-4Weygandt,Accounting Principles,13/e,Solutions ManualQuestions Chapter 1(Continued)9.The three basic forms of business organizations are: (1) proprietorship, (2) partnership, and(3) corporation.LO2 BT: K Difficulty: Easy TOT:1 min. AACSB: None AICPA FC: Reporting10.One of the advantagesHelen Ruppwould enjoy is that ownership of a corporation is representedbytransferablesharesofstock. ThiswouldallowHelentoraise moneyeasily bysellinga part of her ownership in the company. Another advantage is that because holders of the shares(stockholders) enjoy limited liability; they are not personally liable for the debts of the corporateentity. Also, because ownership can be transferred without dissolving the corporation, the corporationenjoys an unlimited life.LO2 BT: K Difficulty: Easy TOT: 4 min. AACSB: None AICPA FC: Reporting11.The basic accounting equation is Assets = Liabilities + Owner’s Equity.LO3 BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Measurement12.(a)Assets are resources owned by a business. Liabilities are claims against assets. Put moresimply, liabilities are existing debts and obligations. Owner’s equity is the ownership claimon total assets.(b)Owner’s equity is affected by owner’s investments, drawings, revenues, and expenses.LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting13.The liabilities are: (b) Accounts payable and (g) Salaries and wages payable.LO3 BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Reporting14.Yes, a business can enter into a transaction in which only the left side of the accounting equationis affected. An example would be a transaction where an increase in one asset is offset bya decrease in another asset. An increase in the Equipment account which is offset by a decreasein the Cash account is a specific example.LO4 BT: C Difficulty: Moderate TOT: 3 min. AACSB: None AICPA FC: Reporting15.Business transactions are the economic events ofthe enterprise recorded by accountantsbecause they affect the basic accounting equation.(a)The death of the owner of the company is not a business transaction as it does not affectthe basic accounting equation.(b)Supplies purchased on account is a business transaction as it affects the basic accountingequation.(c)An employee being fired is not a business transaction as it does not affect the basicaccounting equation.(d)A withdrawal of cash from the business is a business transaction as it affects the basicaccounting equation.LO4 BT: C Difficulty: Moderate TOT: 4 min. AACSB: None AICPA FC: Reporting16.(a)Decrease assets and decrease owner’s equity.(b)Increase assets and decrease assets.(c)Increase assets and increase owner’s equity.(d)Decrease assets and decrease liabilities.LO4 BT: C Difficulty: Moderate TOT: 3 min. AACSB: None AICPA FC: Reporting

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Weygandt,Accounting Principles,13/e,Solutions Manual1-5Questions Chapter 1(Continued)17.(a)Income statement.(d)Balance sheet.(b)Balance sheet.(e)Balance sheet and owner’s equity statement.(c)Income statement.(f)Balance sheet.LO5BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting18.No, this treatment is not proper. While the transaction does involve a receipt of cash, it does notrepresent revenues. Revenues are the gross increase in owner’s equity resulting from businessactivities entered into for the purpose of earning income. This transaction is simply an additionalinvestment made by the owner in the business.LO4 BT: C Difficulty: Moderate TOT: 3 min. AACSB: None AICPA FC: Reporting19.Yes. Net income does appear on the income statement—it is the result of subtracting expensesfrom revenues. In addition, net income appears in the owner’s equity statement—it is shown asan addition to the beginning-of-period capital. Indirectly, the net income of a company is alsoincluded in the balance sheet. It is included in the capital account which appears in the owner’sequity section of the balance sheet.LO5 BT: C Difficulty: Moderate TOT:4min. AACSB: None AICPA FC: Reporting20.(a)Ending capital balance.....................................................................................$189,000Less:Beginning capital balance.......................................................................186,000Net income.......................................................................................................$3,000($189,000–$186,000= $3,000)(End. cap. bal.–Beg. cap. bal.= Net inc.)(b)Ending capital balance.....................................................................................$189,000Less:Beginning capital balance.......................................................................186,0003,000Deduct: Investment.........................................................................................13,000Netloss............................................................................................................$(10,000)($189,000–$186,000–$13,000= ($10,000))(End. cap. bal.–Beg. cap. bal.–Invest.= Net.Loss)LO5 BT: APDifficulty: Moderate TOT: 4 min. AACSB: Analytic AICPA FC: Measurement21.(a)Total revenues ($20,000 + $70,000)................................................................$90,000($20,000 + $70,000= $90,000)(Cash rev. + Rev. on acct.= Tot.rev.)(b)Total expenses ($26,000 + $40,000)................................................................$66,000($26,000 + $40,000= $66,000)(Cash exp. + Exp. on acct.= Tot.exp.)(c)Total revenues.................................................................................................$90,000Total expenses................................................................................................66,000Net income.......................................................................................................$24,000($90,000–$66,000= $24,000)(Tot. rev.–Tot. exp.= Net inc.)LO5 BT: AP Difficulty: Moderate TOT: 4 min. AACSB: Analytic AICPA FC: Measurement22.Apple’s accounting equation(in millions)at September 26, 2015was $290,479= $171,124+$119,355.($290,479= $171,124+ $119,355)(Tot. assets = Tot. liabl. + Tot. stkhldrs. equity)LO3 BT: APDifficulty: ModerateTOT: 3 min.AACSB: AnalyticAICPA FC: Measurement

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1-6Weygandt,Accounting Principles,13/e,Solutions ManualSOLUTIONS TO BRIEF EXERCISESBRIEF EXERCISE 1-1(a)$90,000–$50,000 = $40,000 (Owner’s Equity).($90,000-$50,000 = $40,000)(Assets–Liabl. = Owner’s equity)(b)$44,000 + $70,000 = $114,000 (Assets).($44,000 + $70,000 = $114,000)(Liabl. + Owner’s equity = Assets)(c)$94,000–$53,000 = $41,000 (Liabilities).($94,000-$53,000 = $41,000)(Assets–Owner’s equity = Liabl.)LO3 BT: AP Difficulty: Easy TOT: 3 min. AACSB: Analytic AICPA FC: MeasurementBRIEF EXERCISE 1-2(a)$120,000 + $230,000 = $350,000 (Total assets).($120,000 + $230,000 = $350,000)(Liabl. + Owner’s equity = Assets)(b)$190,000–$89,000 = $101,000 (Total liabilities).($190,000-$89,000 = $101,000)(Assets–Owner’s equity = Liabl.)(c)$900,000–0.5($900,000) = $450,000 (Owner’s equity).[$900,000–($900,000 x .5) = $450,000][Assets–(Assets x .5) = Owner’s equity]LO3 BT: AP Difficulty: Easy TOT: 3 min. AACSB: Analytic AICPA FC: MeasurementBRIEF EXERCISE 1-3(a)($800,000 + $150,000)–($300,000–$60,000) = $710,000(Owner’s equity).[($800,000 + $150,000)–($300,000-$60,000) = $710,000][(Beg. assets + Incr. in assets)–(Beg. liabl.–Decr. in liabl) = End. owner’s equity](b)($300,000 + $100,000) + ($800,000–$300,000–$70,000) = $830,000(Assets).[($300,000 + $100,000) + ($800,000-$300,000-$70,000) = $830,000][(Beg. liabl. + Incr. in liabl.) + (Beg. assets–Beg. liabl.–Decr. in owner’s equity) = End.assets](c)($800,000–$80,000)–($800,000–$300,000 + $120,000) = $100,000(Liabilities).[($800,000-$80,000)–($800,000-$300,000 + $120,000) = $100,000][(Beg. assets–Decr. in assets)–(Beg. assets–Beg. liabl. + Incr. in owner’s equity) = End.liabl.]LO3 BT: AP Difficulty: Moderate TOT: 4 min. AACSB: Analytic AICPA FC: Measurement

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Weygandt,Accounting Principles,13/e,Solutions Manual1-7BRIEF EXERCISE 1-4Owner’s EquityAssets=Liabilities+Owner’sCapital–Owner’sDrawings+Revenues–Expenses(a)X=$90,000+$150,000–$40,000+$450,000–$340,000X=$90,000+$220,000X=$310,000(Assets =$90,000 + $150,000-$40,000 + $450,000-$340,000)(Assets = Liabl. + Owner’s cap.–Owner’s draw. + Rev.–Exp.)(b)$57,000=X+$35,000–$7,000+$52,000–$35,000$57,000=X+$45,000X=$12,000($57,000–$45,000)($57,000 = Liabl. + $35,000-$7,000 + $52,000-$35,000)(Assets = Liabl. + Owner’s cap.–Owner’s draw. + Rev.–Exp.)(c)$660,000=($660,000 x 2/3)+X (Owner’s equity)$660,000=$440,000+XX=$220,000[$660,000 = ($660,000 x 2/3) + Owner’s equity][Assets = (Assets x 2/3) + Owner’s equity]LO3 BT: AP Difficulty: Moderate TOT: 5 min. AACSB: Analytic AICPA FC: MeasurementBRIEF EXERCISE 1-5A(a)Accounts receivableA(d)SuppliesL(b)Salaries and wages payableOE(e)Owner’s capitalA(c)EquipmentL(f)Notes payableLO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: ReportingBRIEF EXERCISE 1-6E(a)Advertising expenseD(e)Owner’s drawingsR(b)Service revenueR(f)Rent revenueE(c)Insurance expenseE(g)Utilities expenseE(d)Salaries and wages expenseLO3 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Reporting

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1-8Weygandt,Accounting Principles,13/e,Solutions ManualBRIEF EXERCISE 1-7AssetsLiabilitiesOwner’s Equity(a)++NE(b)+NE+(c)–NE–LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: MeasurementBRIEF EXERCISE 1-8AssetsLiabilitiesOwner’s Equity(a)+NE+(b)–NE–(c)NENENELO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: MeasurementBRIEF EXERCISE 1-9R(a)Received cash for services performedNOE(b)Paid cash to purchase equipmentE(c)Paid employee salariesLO4BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Reporting

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Weygandt,Accounting Principles,13/e,Solutions Manual1-9BRIEF EXERCISE 1-10SMYTHCOMPANYBalance SheetDecember 31,2020AssetsCash..................................................................................................$ 49,000Accounts receivable........................................................................62,500Total assets..............................................................................$111,500Liabilities and Owner’s EquityLiabilitiesAccounts payable....................................................................$ 90,000Owner’s equityOwner’s capital........................................................................21,500Total liabilities and owner’s equity................................$111,500[($49,000 + $62,500) = $90,000 + $21,500][(Cash + Accts. rec.) = Accts. pay. + Owner’s cap.]LO5 BT: AP Difficulty: Easy TOT: 4 min. AACSB: Analytic AICPA FC: ReportingBRIEF EXERCISE 1-11BS(a)Notes payableIS(b)Advertising expenseOE, BS(c)Owner’s capitalBS(d)CashIS(e)Service revenueLO5 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: ReportingSOLUTIONS FOR DO IT! EXERCISESDO IT! 1-11.False.The three steps in the accounting process are identification,recording, and communication.2.True.3.False.Financial accountingprovides reports to help investors andcreditors evaluate a company.4.True.5.True.LO1 BT: K Difficulty: Easy TOT:3 min. AACSB: None AICPA FC: Measurement

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1-10Weygandt,Accounting Principles,13/e,Solutions ManualDO IT! 1-21.False.Congress passed the Sarbanes-Oxley Act to reduce unethicalbehavior and decrease the likelihood of future corporate scandals.2.False.The standards of conduct by which actions are judged as rightor wrong, honest or dishonest, fair or not fair, are ethics.3.False.The primary accounting standard-setting body in the UnitedStates is the Financial Accounting Standards Board (FASB).4.True.5.True.LO2 BT: K Difficulty: Easy TOT: 4 min. ACSB: None AICPA FC: MeasurementDO IT! 1-31.Drawings is owner’s drawings (D); it decreases owner’s equity.2.Rent Revenue is revenue (R); it increases owner’s equity.3.Advertising Expense is an expense (E); it decreases owner’s equity.4.When the owner puts personal assets into the business, it is investmentby owner (I); it increases owner’s equity.LO3 BT: AP Difficulty: Easy TOT: 6 min. AACSB: Analytic AICPA FC: MeasurementDO IT! 1-4Assets=Liabilities+Owner’s EquityCash+AccountsReceivable=AccountsPayable+Owner’sCapital–Owner’sDrawings+Revenues–Expenses(1)+$20,000+$20,000(2)+$20,000–$20,000(3)+$3,200–$3,200(4)–$2,500–$2,500LO4 BT: AP Difficulty: Moderate TOT: 8 min. AACSB: Analytic AICPA FC: Measurement

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Weygandt,Accounting Principles,13/e,Solutions Manual1-11DO IT! 1-5(a)Thetotal assetsare$49,000,comprisedof Cash$6,500,AccountsReceivable $13,500, and Equipment $29,000.($6,500 + $13,500 + $29,000 = $49,000)(Cash + Accts. rec. + Equip. = Tot. assets)(b)Net income is $20,500, computed as follows:RevenuesService revenue...................................................$53,500ExpensesSalaries and wages expense.............................$16,500Rent expense.......................................................10,500Advertising expense...........................................6,000Total expenses............................................33,000Net income...................................................................$20,500[$53,500–($16,500 + $10,500 + $6,000) = $20,500][Serv. rev.–(Sal. & wages exp. + Rent exp. + Advert. exp) = Net inc.](c)The ending owner’s equity balance ofKirbyCompany is $21,000. Byrewriting the accounting equation, we can compute Owner’s Equity asAssets minus Liabilities, as follows:Total assets [as computed in (a)]..............................$49,000Less: LiabilitiesNotes payable......................................................$25,000Accounts payable...............................................3,00028,000Owner’s equity............................................................$21,000Note that it is not possible to determine the company’s owner’s equity inany other way, because the beginning balance for owner’s equity is notprovided.[$49,000–($25,000 + $3,000) = $21,000][Tot. assets–(Notes pay. + Accts. pay.) = Owner’s equity]LO 5 BT: AP Difficulty: Moderate TOT: 10 min. AACSB: Analytic AICPA FC: Measurement, Reporting

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1-12Weygandt,Accounting Principles,13/e,Solutions ManualSOLUTIONS TO EXERCISESEXERCISE 1-1CAnalyzing and interpreting information.RClassifying economic events.CExplaining uses, meaning, and limitations of data.RKeeping a systematic chronological diary of events.RMeasuring events in dollars and cents.CPreparing accounting reports.CReporting information in a standard format.ISelecting economic activities relevant to the company.RSummarizing economic events.LO1 BT: C Difficulty: Moderate TOT: 6 min. AACSB: None AICPA FC: MeasurementEXERCISE 1-2(a)Internal usersMarketing managerProduction supervisorStore managerVice-president of financeExternal usersCustomersInternal Revenue ServiceLabor unionsSecurities and Exchange CommissionSuppliers(b)ICan we afford to give our employees a pay raise?EDid the company earn a satisfactory income?IDo we need to borrow in the near future?EHow does the company’s profitability compare to other companies?IWhat does it cost us to manufacture each unit produced?IWhich product should we emphasize?EWill the company be able to pay its short-term debts?LO1 BT: C Difficulty: Simple TOT: 6 min. AACSB: None AICPA FC: Reporting

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Weygandt,Accounting Principles,13/e,Solutions Manual1-13EXERCISE 1-3Angela Duffy, president ofDuffyCompany, instructedJana Barth, the headoftheaccountingdepartment,toreportthecompany’slandinitsaccountingreports at its fair value of $170,000 instead of its cost of $100,000,in an effortto make the company appear to be a better investment. Thehistoricalcost principle requires that assets be recorded and reported attheir cost, because cost is faithfully representative and can be objectivelymeasured and verified. In this case, thehistoricalcost principle should beused and Land reported at $100,000, not $170,000.The stakeholders include stockholders and creditors ofDuffyCompany,potential stockholders and creditors, other users ofDuffy’s accountingreports,AngelaDuffy,andJanaBarth.AllusersofDuffy’saccountingreportscould be harmed by relying on information that may be unreliable.Angela Duffycould benefit if the company is able to attract more investors,but would be harmed if the inappropriate reporting is discovered. Similarly,Jana Barthcould benefit by pleasing her boss, but would be harmed if theinappropriate reporting is discovered.Jana’salternatives are to report the land at $100,000 or to report it at$170,000. Reporting the land at $170,000 is not appropriate since it maymislead many people who rely onDuffy’s accounting reports to make finan-cialdecisions.Janashould report the land at its cost of $100,000. Sheshould try to convinceAngela Duffythat this is the appropriate course ofaction, but be prepared to resign her position ifDuffyinsists.LO2 BT: C Difficulty: Moderate TOT: 8 min. AACSB: None AICPA FC: Measurement, ReportingEXERCISE 1-41.Incorrect.Thehistoricalcostprinciplerequiresthatassets(suchasbuildings) be recorded and reportedat their cost.2.Correct.Themonetary unit assumptionrequires that companies includein the accounting records only transaction data that can be expressedin terms of money.3.Incorrect.Theeconomic entity assumptionrequires that the activities ofthe entity be kept separate and distinct from the activities of its ownerand all other economic entities.LO2 BT: C Difficulty: Moderate TOT: 6 min. AACSB: None AICPA FC: Measurement

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1-14Weygandt,Accounting Principles,13/e,Solutions ManualEXERCISE 1-5AssetLiabilityOwner’s EquityCashAccounts payableOwner’s capitalEquipmentNotes payableSuppliesAccounts receivableSalaries and wagespayableLO3 BT: C Difficulty: Easy TOT: 4 min. AACSB: None AICPA FC: ReportingEXERCISE 1-61.Increase in assets and increase in owner’s equity.2.Decrease in assets and decrease in owner’s equity.3.Increase in assets and increase in liabilities.4.Increase in assets and increase in owner’s equity.5.Decrease in assets and decrease in owner’s equity.6.Increase in assets and decrease in assets.7.Increase in liabilities and decrease in owner’s equity.8.Increase in assets and decrease in assets.9.Increase in assets and increase in owner’s equity.LO4 BT: C Difficulty: Easy TOT: 7 min. AACSB: None AICPA FC: MeasurementEXERCISE 1-71.(c)5.(d)2.(d)6.(b)3.(a)7.(e)4.(b)8.(f)LO4 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: MeasurementEXERCISE 1-8(a)1.Owner invested $15,000 cash in the business.2.Purchased equipment for $5,000, paying $2,000 in cash and thebalance of $3,000 on account.3.Paid $750 cash for supplies.4.Performed$8,500ofservices, receiving $4,000cash and $4,500on account.5.Paid $1,500 cash on accounts payable.

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Weygandt,Accounting Principles,13/e,Solutions Manual1-15EXERCISE 1-8 (Continued)6.Owner withdrew $2,000 cash for personal use.7.Paid $560cash for rent.8.Collected $450 cash from customers on account.9.Paid salaries and wages of $4,800.10.Incurred $400of utilities expense on account.(b)Investment.................................................................................$15,000Service revenue........................................................................8,500Drawings....................................................................................(2,000)Rent expense.............................................................................(560)Salaries and wages expense...................................................(4,800)Utilities expense........................................................................(400)Increase in owner’s equity.......................................................$15,740($15,000 + $8,500-$2,000-$560-$4,800-$400 = $15,740)(Invest. + Serv. rev.–Owner’s draw.–Rent exp.–Sal. & wages exp.–Util. exp. = Incr. in owner’s equity)(c)Service revenue........................................................................$8,500Rent expense.............................................................................(560)Salaries and wages expense...................................................(4,800)Utilities expense........................................................................(400)Net income.................................................................................$2,740[$8,500–($560+ $4,800 + $400) = $2,740][Serv. rev.–(Rent exp. + Sal. & wages exp. + Util. exp.) = Net inc.]LO4 BT: AP Difficulty: Moderate TOT: 15 min. AACSB: Analytic AICPA FC: Measurement, ReportingEXERCISE 1-9PEAT DELOITTE& CO.Income StatementFor the Month Ended August 31,2020RevenuesService revenue..........................................................$8,500ExpensesSalaries and wages expense.....................................$4,800Rent expense...............................................................560Utilities expense..........................................................400Total expenses....................................................5,760Net income..........................................................................$2,740

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