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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 3-42 Revenue and Expense Recognition

Omega Transportation Inc., headquartered in Atlanta, Georgia, uses accrual-basis accounting and engaged in the following transactions:

• billed customers $3,580,000 for transportation services

• collected cash from customers in the amount of $2,479,000

• purchased fuel supplies for $1,655.000 cash

• used fuel supplies that cost $1,598,240

• employees earned salaries of $425,160

• paid employees $413,380 cash for salaries

Required:

Determine the amount of sales revenue and total expenses for Omega’s income statement.

To determine

Concept Introduction:

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

There are two ways to present and income statement: Single-step and Multi-step. In the, multi-step income statement the net income calculated after showing multiple steps. In this statement operating and items are separate from non operating items.

To Calculate:

The Amount of sales revenue and total expenses for Omega’s income statement.

Explanation

The Amount of sales revenue and total expenses for Omega’s income statement is calculated as follows;

Sales Revenue = $3,580,000

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