Answer Happy

Income statement preparation On December 31, 2019, Cathy Chen, a
self-employed
certified public accountant (CPA), completed her first full year
in business. During
the year, she billed $366,000 for her accounting services. She
had two employees, a
bookkeeper and a clerical assistant. In addition to her monthly
salary of $8,030,
Ms. Chen paid annual salaries of $47,700 and $35,800 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 $10,700 for the year. In addition, Ms. Chen
spent $16,500 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 taxdeductible
expense) were $2,710 per month. Depreciation expense on the
office
furniture and fixtures was $15,400 for the year. During the
year, Ms. Chen paid
interest of $15,300 on the $115,000 borrowed to start the
business. She paid an
average tax rate of 30% during 2019.