The Wildcat Magazine prepares annual financial statements. The December 31, 2016
ID: 2330463 • Letter: T
Question
The Wildcat Magazine prepares annual financial statements. The December 31, 2016 and December 31, 2017, trial balances contained the following account information: Supplies Interest Payable Salaries Payable Unearned Revenue Dec 31,2016 $20 0 8,000 45,000 Dec 31,2017 $3,300 800 6,500 56,300 The following information is also known: a) The 2017 income statement reports $12,000 in supplies expense. b) Wildcat Magazine loaned money to a supplier on November 1st, 2017 at a 10% annual interest rate. The loan must be repaid with interest on March 1st, 2017. c) $112,000 was paid to employees for wages during 2017. d) Wildcat received $178,200 from customers for annual subscriptions during 2017 Required: 1. What was the cost of supplies purchased during 2017? 2. How much money was loaned to the supplier on November 1st, 2017? 3. What was the total amount of salaries expense reported on the 2017 income statement? 4. How much subscription revenue was recognized (recorded) in 2017?Explanation / Answer
Answers
Beginning balance - Supplies
+
Cost of Supplies purchased in 2017
-
Ending balance - Supplies
=
Supplies expenses for 2017
Cost of Supplies purchased in 2017
=
Supplies expenses for 2017
+
Ending balance - Supplies
-
Beginning balance - Supplies
Cost of Supplies purchased in 2017
=
$ 12,000.00
+
$ 3,300.00
-
$ 2,500.00
Cost of Supplies purchased in 2017
$ 12,800.00
Answer = $ 12,800
A
Amount loaned on
01-Nov-17
B = 1 Nov to 31 Dec
No. of months till 31 Dec 2017
2 months [Nov and Dec]
C
Interest payable on Dec 31, 2017 (for 2 months)
$ 800.00
D = C x (12/2months)
12 month interest
$ 4,800.00
E
Interest rate
10%
F = D/E
Amount loaned on 1 Nov 2017
$ 48,000.00
Answer = $ 48,000
Salaries Payable - Beginning Balance
+
Salaries expenses on 2017 Income Statement
-
Salaries Wages paid
=
Salaries Payable - Ending Balance
Salaries expenses on 2017 Income Statement
=
Salaries Payable - Ending Balance
+
Salaries Wages paid
-
Salaries Payable - Beginning Balance
Salaries expenses on 2017 Income Statement
=
$ 6,500.00
+
$ 112,000.00
-
$ 8,000.00
Salaries expenses on 2017 Income Statement
=
$ 110,500.00
Answer = $ 110,500
Beginning Balance - Unearned revenue
+
Subscription received
-
Ending Balance - Unearned revenue
=
Subscription Revenue Recognised
$ 45,000.00
+
$ 178,200.00
-
$ 56,300.00
=
Subscription Revenue Recognised
$ 166,900.00
=
Subscription Revenue Recognised
Answer = $ 166,900
Beginning balance - Supplies
+
Cost of Supplies purchased in 2017
-
Ending balance - Supplies
=
Supplies expenses for 2017
Cost of Supplies purchased in 2017
=
Supplies expenses for 2017
+
Ending balance - Supplies
-
Beginning balance - Supplies
Cost of Supplies purchased in 2017
=
$ 12,000.00
+
$ 3,300.00
-
$ 2,500.00
Cost of Supplies purchased in 2017
$ 12,800.00
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