On December 31, 2019, Cathy Chen, a self employed certified public accountant (CPA), completed her first full

Question:

On December 31, 2019, Cathy Chen, a self employed certified public accountant (CPA), completed her first full year in business. During the year, she charged her clients $360,000 for accounting services. She had two employees, a bookkeeper and a clerical assistant. In addition to her monthly salary of $8,000, Ms. Chen paid annual salaries of $48,000 and $36,000 to the bookkeeper and the clerical assistant, respectively. Employment taxes and benefit costs for Ms. Chen and her employees totaled $34,600 for the year. Expenses for office supplies, including postage, totaled $10,400 for the year. In addition, Ms. Chen spent $17,000 during the year on tax-deductible travel and entertainment associated with client visits and new business development. Lease payments for the office space rented (a tax-deductible expense) were $2,700 per month. Depreciation expense on the office furniture and fixtures was $15,600 for the year. During the year, Ms. Chen paid interest of $15,000 on the $120,000 borrowed to start the business. She paid an average tax rate of 30% during 2019.
a. Prepare an income statement for Cathy Chen, CPA, for the year ended December 31, 2019.
b. Evaluate her 2019 financial performance.

Fantastic news! We've located the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Principles of Managerial Finance

ISBN: 978-0134476315

15th edition

Authors: Chad J. Zutter, Scott B. Smart

Question Posted: