Pest Away Corporation was organized by three individuals on January 1, 2014, to provide insect extermination services. At the end of 2014, the following statement of earnings was prepared:

Required:
1. What was the average amount of monthly revenue?
2. What was the amount of monthly rent?
3. Explain why supplies are reported as an expense.
4. Explain why interest is reported as an expense.
5. What was the average income tax rate for Pest Away Corporation?
6. Can you determine how much cash the company had on December 31, 2014? Explain.

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PEST AWAY CORPORATION Statement of Earnings For the Year Ended December 31,2014 Revenues Service revenue (cash) Service revenue (credit) $192,000 24,000 Total revenues $216,000 Expenses Salaries Rent Utilities Advertising Supplies Interest 76,000 21,000 12,000 14,000 25,000 8,000 Total expenses 156.000 60.000 21.000 39,000 Earnings before income tax Income tax expense Net earnings for the year