two years ago darlene darby opened a delivery service darlene 251011

Two years ago, Darlene Darby opened a delivery service. Darlene reports the following accounts on her income statement:

Sales …………………………………….. $69,000

Advertising Expense ……………………. 3,500

Salaries Expense ………………………… 39,000

Rent Expense ……………………………. 10,000

These amounts represent two years of revenue and expenses. Darlene asks you how she can tell how much of the income is from the first year of business and how much is from the second year. She provides the following additional data:

a. Sales in the second year are double those of the first year.

b. Advertising expense is for a $500 opening promotion and weekly ads in the newspaper.

c. Salaries represent one employee for the first nine months and two employees for the remainder of the time. Each is paid the same salary. No raises have been granted.

d. Rent has not changed since the business opened.

Required

Prepare income statements for years 1 and 2.

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