Dakota Electric Company uses the calendar year as its annual reporting period. T
ID: 2460559 • Letter: D
Question
Dakota Electric Company uses the calendar year as its annual reporting period. The controller forDakota has provided you with the following information:
(i) Employees work Monday through Friday and get paid holidays. The company's weekly payroll is$7,500 and is paid each Friday. Assume that December 31st falls on a Wednesday.
(ii) During late June the company paid $1,800 for a 12 month insurance policy. The policy paymentwas originally recorded to an asset account and has an effective date of 7/1st.
(iii) On Wednesday, December 31st the company completed $7,000 of customer services. Bills weremailed on Friday, January 2nd and the customers paid shortly thereafter.
(iv) On Friday, January 2nd two bills were paid, specifically the December utility bill totaling $400 andthe January health insurance premium totaling $2,500.
Before considering the above items, Dakota reported $65,000 of unadjusted net income. Please assumethat Dakota records adjusting entries once per year in December and that no adjusting entries have beenbooked for the above items. Determine the necessary adjusting entries and calculate Dakota's adjustednet income
A. $59,800
B. $66,200
C. $63,200
D. $65,200
E. None of the above
Explanation / Answer
Dakota Electric Company All Amounts in $ Unadjusted Net Income as reported 65000 Less : Weekly Payroll paid on Friday 2 Jan -7500 Less : Insurance Expenses -1800 Add : Revenue from Customer Services 7000 Less : Utility and Health Insurance Premium -2900 Adjusted Net Income 59800
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