Sunland Company was organized on April 1, 2019, by Barbara Evans. Barbara is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Barbara prepared the following income statement for the quarter that ended March 31, 2020.

Sunland Company

Income Statement

For the Quarter Ended March 31, 2020

Revenues

Rent revenue

$90,500

Operating expenses

Advertising

$5,000

Salaries and wages

29,500

Utilities

800

Depreciation

800

Maintenance and repairs

4,000

Total operating expenses

40,100

Net income

$50,400

Barbara thought that something was wrong with the statement because net income had never exceeded $19,600 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 above in the income statement, the ledger contains the following additional selected balances at March 31, 2020.

Supplies $5,600

Prepaid Insurance 7,600

Notes Payable 12,000

You then make inquiries and discover the following.

1. Rent revenues include advanced rentals for summer occupancy $14,600.

2. There were $1,600 of supplies on hand at March 31.

3. Prepaid insurance resulted from the payment of a one-year policy on January 1, 2020.

4. The mail on April 1, 2020, brought the following bills: advertising for week of March 24, $120; repairs made March 10, $270; and utilities, $180.

5. Salaries and wages expense total $250 per day. At March 31, 1 day salaries and wages have been incurred but not paid.

6. The note payable is a 3-month, 11% note dated January 1, 2020.

Prepare a correct income statement for the quarter ended March 31, 2020.

Sunland Company Income Statement