The accountant for Flagger Company prepared the following list of accounting equation element balances from the company's records for the year ended December 31: Fees earned $165,000 Cash $30,000 Accounts receivable 14,000 Selling expenses 44,000 Equipment 42,000 Flagger, capital 36,000 Accounts payable 12,000 Interest income 3,000 Salaries and wages expense 40,000 Rent expense 51,000 Income taxes payable 5,000 Prepaid rent 2,000 Notes payable 20,000 Income taxes expense 18,000 Prepare an Income Statement for Flagger Company in good form. Flagger Company Income Statement For the Year Ended December 31 Revenues: $ $ Expenses: $ Total expenses $

Net operating income = 15000

Explanation:

                                    Flagger  Company

                                     income statement

                                     For the year ended

Fee earned                                                                                 =  165000

less: Operating expense

         Salaries and wages expense 40000

        Rent expense                            51000

                                                                                                    =  (91000)

                                 Gross profit                                                   74000

less: Selling expense                                                                     ( 44000)

          Profit before interest and taxes                                       30000  

less: Interest expense                                                                  (18000)    

                                                                                                      12000

Add: Interest income                                                                   = 3000  

           Net operating income                                                     15000

disadvantages of leasing a vehicle: no vehicle equity and mileage limitations

disadvantages of purchasing a vehicle: large down payment and vehicle depreciation

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