Wong's Insurance Agency adjusts its accounts at the end of each month. The adjusted balances of the revenue and expense accounts at two different dates of the year appear on the following page. The company's fiscal year starts on July 1.

The company is subject to an income tax rate of 40 percent.
Required:
Prepare income statements for two separate time periods: the quarter ending March 31, 2012, and the nine-month period ending March 31, 2012. Explain how you determined the amounts for each time period and show supporting computations.

Transcribed Image Text:

Commissions earned March 31, 2012 $72,000 December 31, 2011 $45,000 Salaries expense 18,000 12,000 Rent expense 11,250 7,500 Depreciation expense 1,350 900 Advertising expense 14,000 7,500