37. Apartment building manager reports revenue of $1,350 per month. He was 100% occupied for the...

37. Apartment building manager reports revenue of $1,350 per month. He was 100% occupied for the year. He pays $70 per month for water & trash for the complex. His insurance was $1,050 for the year. His payment on the building were $8,400 for the year. $4,815 of it was interest. He was $50 in advertising expense for the year. Maintenance totaled for year totaled $925. He will be depreciating the property $2,320 for the year. He is also depreciating a Heat & Air unit at $815 for the year, which he bought and installed this year for the cost of $5,000. He has $5,300 in his business bank account and is holding deposits of $1,300 in escrow. The land is valued at $20,000. The building is valued at 116,000 with the land. Total depreciation on the building has been $25,000. He owns the local printer $65; the plumber, $420 and the local paper $50. He owes $73,500 on the property. Property taxes for the year are $1,725. The owner paid income tax of $12,500 this year.

How much are total annual expenses for the Profit and Loss Statement?

(A) $3,470.00 (B) $12,540.00 (C) $2,935.00 (D) None of the above

Expert Solution

12,540 is correct answer,

Total annual expense would be as follow-

Water and traces $840 (70*12)

Insurance $1050

Interest $4815

Advertising expense. $50

Maintenance $925

Depreciation property . $2320

Depreciation heat and air $815

Property tax . $1725

Total annual expense. $ 12,540

Total amount own to plumber etc seems prepaid expenses and hence not been included in the annual expense.
Other amounts given are subject to disclosure in statement of financial position.
Depreciation on property has been taken and the amount of depreciation on building i.e 25,000 is accumulated depreciation.
Income tax expense is tax on profits, in the given case it seems that the current income tax is too high compared to income of persons business. Since both the above facts are specifically suggest not to consider income tax expense in the profit and loss statement.

Please comment for any explanation or suggestions.

ekkarill92 answered 2 years ago

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