ABC Corporation Income Statement (Cash Basis)

Revenue $ 25,000

Expenses

Supplies $ (2,000)

Equipment $ (12,000)

Salaries $ (4,000)

Net Income $ 7,000

You determine the following:

(1) $7,000 of the revenues represent advance payments for work not completed by ABC. (2)Supplies on hand as of the end of the period amount to $1,500. (3) The equipment has an expected life of 5 years, and an expected salvage value of $2,000.