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Essay text:
24 -75,000 +75,000 : Purchase of Plastics and Chemicals
Total 230,000 62,500 75,000 367,500
Question 2
Chemalite, Inc.
Income Statement
Jan. 2, 2003 through June 30, 2003
Revenue
Fees earned $0
Expenses
Operating expenses:
Incorporation expenses -7500
Depreciation expense (patent) -12,500
Total operating expenses -20,000
Net income -20,000
The company did incur a loss as Mr. Larson suggested. However, the loss is not $145,000; the loss, which is due to incorporation expenses and the patent depreciation expense, is only $20,000. Mr. Larson did not recognize the building of the machinery and the purchase of the inventory as investments...
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