Maynard--Income Statement

Diane was grateful for the balance sheets that you prepared. In going over the numbers, she remarked, "It's sort of surprising that cash increased by $31,677, but net income was only $19,635. Why was that?"

You reply, "A partial answer to that question is to look at an income statement for June. I think you have already provided the data I need to prepare one for you.

In addition to the data given in the previous problem, she also provided you with a record of cash receipts and disbursements, which is summarized below. She also learned that all account payables were to vendors for purchases of merchandise inventory and that cost of sales was $39,345 in June.

Required: Prepare an income statement for June in the proper format. Explain the derivation of each item on this statement, including cost of sales. Explain why the change in the cash balance was greater than the net income. Explain why the following amounts are incorrect cost of sales amounts for June: (a)$14,715 and (b) $36,030. Under what circumstances would these amounts be the correct cost of sales amounts?