The income statement of Cullumber Company for the month of July shows a net income of $2,600 based on Service Revenue $6,000, Salaries and Wages Expense $2,000, Supplies Expense $1,000, and Utilities Expense $400. In reviewing the statement, you discover the following.
1. Insurance expired during July of $400 was omitted.
2. Supplies expense includes $350 of supplies that are still on hand on July 31.
3. Depreciation on equipment of $350 was omitted.
4. Accrued but unpaid salaries and wages on July 31 of $500 were not included.
5. Services performed but unrecorded totaled $700. Prepare a correct income statement for July 2017.

Explanation:

The preparation correct income statement for July 2017 is presented below:

                                     Cullumber Company

                                     Income statement  

                                    For the month of July

Revenue  

Service revenue $6,700        ($6,000 + $700)

Total revenues $6,700 (A)

Less: Expenses

Salaries and Wages Expense $2,500    ($2,000 + $500)=

Supplies Expense $650     ($1,000 - $350)

Utilities Expense $400

Insurance expense $400

Depreciation expense $350

Total expenses $4,300 (B)

Net income $2,400  (A- B)

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