In: Accounting
ERS Inc. maintains and repairs office equipment. ERS had an average of 10,000 shares of common stock outstanding for the year. The following income statement account balances are available for ERS at the end of 2019.
Advertising expense | $24,100 |
Depreciation expense (on service van) | 16,200 |
Income taxes expense | 15,150 |
Interest expense | 10,100 |
Rent expense | 58,400 |
Insurance expense | 11,900 |
Salaries expense (for administrative personnel) | 195,600 |
Service revenue | 933,900 |
Supplies expense | 66,400 |
Utilities expense | 26,100 |
Wages expense (for service technicians) | 448,300 |
Required:
1. Prepare a single-step income statement for ERS for 2019.
Note: For grouped values (e.g. revenues or expenses), enter individual amounts as positive values. If the total for the group is subtracted or a overall negative amount, enter using a minus sign.
ERS Inc. | ||
Income Statement | ||
For the Year Ended December 31, 2019 | ||
Revenues: | ||
Service revenue | $ | |
Expenses: | ||
Wages expense | $ | |
Salaries expense | ||
Supplies expense | ||
Rent expense | ||
Utilities expense | ||
Advertising expense | ||
Depreciation expense | ||
Insurance expense | ||
Interest expense | ||
Income taxes expense | ||
Total expenses | ||
Net income | $ |
Feedback
1. Prepare an income statement with proper form. Start with company name, statement type, and date. Total revenue minus total expenses = net income.
2. Conceptual Connection: Compute net profit
margin for ERS. Round your answer to one decimal place.
%
If ERS is able to increase its service revenue by $100,000, what should be the effect on future income?
If ERS had an incremental increase in revenue
of $100,000, based on the net profit margin computed, what is the
additional potential profit?
$
Requirement 1 | ||
ERS Inc. | ||
Income Statement | ||
For the Year Ended December 31, 2019 | ||
Revenues: | ||
Service revenue | 933,900 | |
Expenses: | ||
Wages expense | 448,300 | |
Salaries expense | 195,600 | |
Supplies expense | 66,400 | |
Rent expense | 58,400 | |
Utilities expense | 26,100 | |
Advertising expense | 24,100 | |
Depreciation expense | 16,200 | |
Insurance expense | 11,900 | |
Interest expense | 10,100 | |
Income taxes expense | 15,150 | |
Total expenses | 872,250 | |
Net income | 61,650 | |
Requirement 2 | ||
Net Profit Margin = (Net income / Total Revenue) X100 | ||
=61650 /933900 X100 | ||
=6.6% | ||
If ERS is able to increase its service revenue by $100,000, what should be the effect on future income | ||
Future Income = 61650 +100000 | ||
= $ 161,650 | ||
Asuming that there is no increase in Expenditure | ||
Net Profit Margin = (Net income / Total Revenue) X100 | ||
=161650 /933900 X100 | ||
=17.31% | ||
Additional potential Profit = 100,000)X17.31 % | ||
= $17,310 |