Three individuals organized Pest Away Corporation on January 1, 2012, to provide insect extermination services. The company paid dividends of $10,000 during the year. At the end of 2012, the following income statement was prepared:

Required:
1. What was the amount of average monthly revenue?
2. What was the average amount of monthly salaries and wages expense?
3. Explain why advertising is reported as an expense.
4. Explain why the dividends are not reported as an expense.
5. Can you determine how much cash the company had on December 31, 2012? Answer yes or no, and explain your reasoning.

Transcribed Image Text:

PEST AWAY CORPORATION Income Statement For the Year Ended December 31, 2012 Revenues Service Revenue Sales Revenue $192,000 24,000 Total Revenues $216,000 Expenses Supplies Expense Salaries and Wages Expense Advertising Expense $ 76,000 33,000 22,000 46,000 177,000 39,000 Total Expenses Net Income