Question

Peter’s Curling Inc. operates several curling centres (for games and equipment sales). The following transactions occurred in the month of October.

(a)	Peter’s collected $13,450 from customers for games played in October.
(b)	Peter’s sold $8,450 in curling equipment inventory; received $5,300 in cash and the rest on account; cost of sales is $5,100.
(c)	Peter’s received $3,300 from customers on account who purchased merchandise in September.
(d)	The curling league gave Peter’s a deposit of $3,800 for the upcoming fall season.
(e)	Peter’s paid $4,300 for the September electricity bill and received the October bill for $4,730 to be paid in November.
(f)	Peter’s paid $6,300 to employees for work in October.
(g)	Peter’s purchased $1,890 in insurance for coverage from October 1 to December 31.
(h)	Peter’s paid $2,150 to plumbers for repairing a broken pipe in the washrooms.

Prepare a statement of earnings for Peter’s Curling Inc. for the month of October 2017. Use an income tax rate of 30 percent.

Answer 1

Income Statement (October)
Revenue
Games Revenue	$          13,450
Sales Revenue	$            8,450
Total Revenue		$      21,900
Expenses
Cost of Sales	$            5,100
Electricity Expense	$            4,730
Salaries Expense	$            6,300
Insurance Expense	$               630
Repair Expense	$            2,150
Total Expenses		$      18,910
Income before taxes		$        2,990
Income tax @30%		$            897
Net Income		$        2,093

Insurance expense for October = $1890/ 3 = $630

Statement of Retained Earnings
Beginning Balance	$                   -
Add: Net Income	$            2,093
	$            2,093
Less : Dividends	$                   -
Ending Balance	$            2,093