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BYP4-6 Council Bluff Park was organized on April 1, 2011, by Lori Delzer. Lori is a good manager

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BYP4-6 Council Bluff Park was organized on April 1, 2011, by Lori Delzer. Lori is a good manager
but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Lori prepared
the following income statement for the quarter that ended March 31, 2012.

COUNCIL BLUFF PARK
Income Statement
For the Quarter Ended March 31, 2012

Revenues
Rental revenues $83,000
Operating expenses
Advertising $ 4,200
Wages 27,600
Utilities 1,500
Depreciation 800
Repairs 2,800
Total operating expenses 36,900
Net income $46,100

Lori knew that something was wrong with the statement because net income had never exceeded
$20,000 in any one quarter. Knowing that you are an experienced accountant, she asks you to
review the income statement and other data.

You first look at the trial balance. In addition to the account balances reported in the income
statement, the ledger contains these selected balances at March 31, 2012.

Supplies $ 4,500
Prepaid Insurance 7,200
Notes Payable 20,000

and so on ....


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