Credit Cash $29,500 52,700 Accounts Receivable Allowance for Doubtful Accounts $

Question

Credit Cash $29,500 52,700 Accounts Receivable Allowance for Doubtful Accounts $701 2,000 1,680 26,300 Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Notes Payable Owner's Capital Service Revenue 6,575 7,200 34,581 107,476 Rent Expense (13 months of rent) Salaries and Wages Expense Utilities Expenses Office Expense Totals 9,113 32,990 1,640 610 33 $156,533 $156,533 1. Fees received in advance from clients $6,340, which were recorded as revenue. 2. Services performed for dients that were not recorded by December 31, $4.790. 3. Bad debt expense for the year is $1,371. 4. Insurance expired during the year $461. Equipment is being depreciated at 10% per year. 6, Monty Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2017. un Rent of the building is $701 per month. The rent for 2017 has been paid, as has that for January 2018, and

Explanation / Answer

Note 1 - Accounts receivable

Accounts receivable as per Trail balance = $52,700

Accounts receivables for services performed which was not recorded earlier = $4,790

Total accounts receivables = $52,700 + $4,790 = $57,490

Note 2 - Allowance for Doubtful accounts

opening balance as per Trail Balance = $701

Allowance for Doubtful accounts during the year = $1,371

Total balance of Allowance of Doubtful accounts as on Dec 31, 2017 = $701 + $1,371 = $2,072

Note 3 - Prepaid Insurance

Prepaid insurance balance as per trail balance = $1,680

Insurance expired during the year = $461

Prepaid insurance balance as on Dec 31, 2017 = $1,680 - $461 = $1,219

Note 4 - Accumulated depreciation - Equipment

Opening balance as per trail balance = $6,575

Depreciation expense for the year ended december 31, 2017 = $2,630

Total accumulated depreciation as on Decemeber 31, 2017 = $6,575 + $2,630 = $9,205

Note 5 - Statement of Owners equity

Note 6: Calculation of Net income

Sales revenue = $107,476

Less: Unearned sales revenue = $6,340

Add: Sales revenue unrecorded earlier = $4,790

Total Sales revenue =$105,926

Less: Rent (12 months) = $9,113 - $701 = $8,412

Less: Salaries and Wages expenses = $32,990 + $2,428 = $35,418

Less: Utilities expenses = $1,640

Less: Office expenses = $610

Less: Interest expense = $60

Less: Depreciation expenses = $2,630

Less: Insuracne expenses = $461

Less: Bad debt expenses = $1,371

Net income = $55,324

Balance sheet December 31, 2017 Assets Current assets: Cash $29,500 Accounts receivables (Note 1) $57,490 Less Allowance for Doubtful Accounts (Note 2) $2,072 $55,418 Prepaid rent $701 Prepaid Insurance (Note 3) $1,219 Supplies $2,000 Total Current assets $88,838 Equipment $26,300 Less Accumulated Depreciation (Note 4) $9,205 $17,095 Total assets $105,933 Liabilites and Owner's Equity Current liabilites: Unearned service revenue $6,340 Interest payable $60 Notes payable $7,200 Salaries and Wages payable $2,428 Total current liabliites $16,028 Owners equity: Owners capital (Note 5) $89,905 Total Liabilites and Owners Equity $105,933

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.