Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 56

Prepare Statements for a Service Company

Chuck’s Brokerage Service (CBS) is a discount financial services firm offering clients investment advice, trading services, and a variety of mutual funds for investment. Chuck has collected the following information for October:

	A	?B	?C
1	Advertising and marketing	$ 180,000
2	Brokerage commissions (revenues)	6,000,000
3	Building rent and utilities	350,000
4	Fees from clients for investment advice	3,000,000
5	Fees paid to execute trades	4,000,000
6	Labor cost for advice	1,600,000
7	Managers’ salaries	600,000
8	Sales commissions to brokers	500,000
9	Training programs for brokers	850,000
10

Required

Prepare an income statement for October for CBS.

Step 1 of 3

Income statement

Income statement is one of the financial statement prepared by the company which shows how much the company has earned by undertaking its business. The income statement shows the revenues for the year and expenses for business which company has incurred and the net figure of revenue less expenses shows the net income earned by the company. If the revenues are more than the expenses, company has net profit and if revenues are less than the expenses then the company would have net loss.