juestion #7 (20 points) The adjusted trial balance for Super Max at December 31,

Question

juestion #7 (20 points) The adjusted trial balance for Super Max at December 31, 2016, are as follows: SUPER MAX Trial Balance December 31, 2016 Adjusted Trial Balance Debit Credit Accounts 3,000 7,000 4,000 6,000 Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable Salaries and Wages Payable Owner's Capital Owner's Drawings Service Revenue Advertising Expense 207,000 29,000 19,000 70,000 3,000 112,000 18,000 123,000 21,000 2,000 3,000 17,000 42,000 Depreciation Expense Insurance Expense Rent Expense Salaries and Wages Expense Supplies Expense Totals 356,000 356,000 Instructions (a) Calculate/Determine the net income or loss for Super Max for the year ended Dec 31, 2016 (b) Calculate the balance of Owner's Capital that would appear on the balance sheet at December 31, 2016 (c) Prepare an income statement for the period ended December 31, 2016 (d) Prepare a statement of owners's equity as of December 31, 2016 (e) Prepare a classified balance sheet for Super Max at December 31, 2016 assuming the note payable is a long-term liability Solution to Problem # 7 a) Net Income

Explanation / Answer

ans a Net Income $22,000 ans b Balance of owner Capital Owner Capital $112,000 Add: net Income $22,000 $134,000 Less: Owner Drawing $18,000 Ending Balance $116,000 ans ans c Income Statement Service Revenue $123,000 Less: Expenses Advertising expenses 21000 Depreciation Expense 12000 Insurance expenses 3000 Rent expenses 17000 Salaries & wages expenses 42000 Supplies Expenses 6000 Total Expenses 101000 Net Income $22,000 ans d Statemnet of owners equity Owner Capital, Beginning balance $112,000 Add: net Income $22,000 $134,000 Less: Owner Drawing $18,000 Owner Capital, Ending Balance $116,000 ans e Classified Baalnce Sheet For the year ended Dec 31 2016 Assets Current Assets cash 13000 Accounts Receivable 7000 Supplies 4000 Prepaid Insurance 6000 Total Current Assets 30000 Equipment 207000 Acc Dep-Equipment 29000 178000 Total Assets 208000 Liabilities & Owner Equity Current liabilities Accounts Payable 19000 Notes Payable 70000 Salaries & wages payable 3000 Total Current liabilities 92000 Owners Capital $116,000 Total Liabilities & Owner Equity $208,000

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