XIANG INSURANCE AGENCY LTD. Income Statement Month Ended July 31, 20x8

Revenues Commission revenue Expenses Salaries expense Advertising expense Rent expense Depreciation expense Total expenses Income before income tax Income tax expense Net income XIANG INSURANCE AGENCY LTD. Income Statement Month Ended July 31, $60,000 $5,000 800 4,200 2 800 12 800 47,200 When the income statement was prepared, the company accountant forgot to take into consideration the following information: 1 2 3 4 5 6 A utility bill for $800 was received on the last day of the month for electric and gas service for the month of July. The company sold a life insurance policy on July 20 to a client for a premium of $28,000. The agency billed the client for the policy and is entitled to a commission of 15%. Supplies on hand at the beginning of the month were $700. The agency purchased additional supplies during the month for $2,500 in cash and $2,200 of supplies were on hand at July 31. The agency purchased a used car at the beginning of July for $16,800 cash. The estimated useful life of the car is 4 years. The agency pays its employees each Friday. Weekly payroll (5 days) is $7,200. July 31 falls on a Tuesday. Estimated income tax expense owing was $10,000. Instructions pare a corrected income statement.