?Happy Camper Park was organized on April 1, 2021, by Erica Hatt. Erica is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Erica prepared the following income statement for the quarter that ended March 31, 2022.

Erica thought that something was wrong with the statement because net income had never exceeded $40,000 in any one quarter. Knowing that you are an experienced accountant, she asks you to review the income statement and other data.You first look at the trial balance. In addition to the account balances reported in the income statement, the ledger contains the following additional selected balances at March 31, 2022.Supplies $6,200Prepaid Insurance 7,200You then make inquiries and discover the following.1. There were $1,700 of supplies on hand at March 31.2. Prepaid insurance resulted from the payment of a one-year policy on January 1, 2022.3. There are four employees who receive wages totaling $300 per day. At March 31, 2 days of salaries and wages have been incurred but not paid.4. Equipment depreciation is $50 per month.

Instructionsa. Prepare a correct income statement for the quarter ended March 31, 2022.b. Explain to Erica the generally accepted accounting principle that she did not recognize in preparing her income statement and their effect on her results.

Transcribed Image Text:

Happy Camper Park Income Statement For the Quarter Ended March 31, 2022 Revenues $90,000 Service revenue Operating expenses Salaries and wages expense $29,800 Advertising expense 5,500 Rent expense 4,000 Utilities expense 900 Depreciation ex pense 450 Total operating expenses 40,700 Net income $49,300