Service Organization Income Statement

Healing Hands Massage Hut offers high-end, specialized massages and grooming services, including manicures, pedicures, facials, and full-body massages. Healing Hands is a new startup service organization that generates monthly sales of $200,000. As a startup organization, Healing Hands spends $5,000 a month on advertising in local newspapers and on social media sites. In addition, each month Healing Hands spends $100,000 to pay its team of highly specialized massage therapists, and $10,000 to a technology company (to handle the companys website, massage appointment scheduling activities, and customer communications). Further, the company incurs a $15,000 monthly expense to rent its hut space in a hip new retail market. Finally, Healing Hands incurs $20,000 of monthly administrative expenses.

Required:

1. Prepare an income statement for Healing Hands for the past month. Enter all amounts as positive numbers.

Healing Hands Massage Hut
Income Statement
For the Past Month
		$
Less operating expenses:
	$
		$

2. Healing Hands income statement has no line item for cost of goods sold. Which of the following statement is correct.