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PA2.
LO 2.1Tom West is a land surveyor who operates a small surveying company, performing surveys for both residential and commercial clients. He has a staff of surveyors and engineers who are employed by the firm. For the year ending December 31, 2017, he reported these income and expenses. Using this information, construct an income statement to reflect his net income for 2017.

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Answer:

                                      Tom West

Income Statement for the year ended December 31, 20 17

                                              $

Service income               850,000

Surveyor salary               (124,000)

Gross profit                     (726,000)

Supplies and material     (32,000)

Utilities                             (14,000)

Office rent                        (24,000)

Administrative expenses (115,000)

Net income                        541,000

Explanation:

Net income is calculated as service revenue minus surveyor salary minus supplies minus utilities minus office rent minus administrative expenses.

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