1-1. Net income for Harris-Smith Company for 2017 includes the effect of the fol
ID: 2590682 • Letter: 1
Question
1-1. Net income for Harris-Smith Company for 2017 includes the effect of the following transactions involving the sale of fixed assets: Sales Asset Price Cost Gain/Loss X $ 20,000 $ 80,000 $ 10,000 Y 25,000 $ 150,000 $ (18,000) Purchases of fixed assets during 2017 amounted to $340,000. The Accumulated Depreciation account increased $40,000 during 2017.
1-1a. Show labelled calculations to determine depreciation expense for 2017.
1-1b. Identify where all relevant information here would be reported in the SCF (indirect method).
1-2. Write the adjusting journal entries that would be made on December 31, 2017 for each of the following situations. • CIRCLE THE ENTRY THAT YOU WANT GRADED. • If no entry is required, then write “NONE” as the entry. • You know you need to show labelled computations.
1-2a. LaForge Corp.’s supplies on January 1 amounted to $9,500. Supplies costing $18,900 were acquired during the year and charged to Supplies. A count on December 31 indicated supplies on hand of $7,000.
1-2b. On June 1, Grech Inc. collected $7,200 of rent for one year in advance and a nominal account was credited.
1-2c. Unsold merchandise at December 31, 2010 was $90,000 and at December 31, 2011 was $74,000. The Purchases account had a balance of $300,000 at yearend.
1-3. Kononov Corporation has the following information at January 1 and December 31, 2017. January 1 December 31 Assets $76,000 $112,000 Liabilities 26,000 28,000 Additional stock of $42,000 was issued and dividends of $15,600 were declared. o Determine the net income or loss for 2017. LABELLED WORK!!!
Explanation / Answer
For Question 1-1, Require Clear bifurcation of Sales Price, Cost And Gain/Loss
Answer 1-2
a) Cash a/c Dr. $ 21400
To Supplies a/c $ 21400
b) Rent a/c Dr. $ 7200
To Unearned Income $ 7200
c) Cost of Goods Sold Dr. $ 316000
To Merchandise Inventory $ 316000
Answer 1-3
Steps to Calculate the Net Income from the change in stockholders' equity:
Calculation of Stockholder's Equity as at 1 Jan. 2017 = Assets minus Liabilities
= $ 76000 - $ 26000
= $ 50000
Calculation of Stockholder's Equity as at 31 Dec. 2017 = Assets minus Liabilities
= $ 112000 - $ 28000
= $ 84000
Difference of Stockholder's Equity During the year = $ 84000 - $ 50000
= $ 34000
Net Income / (Loss) = Difference of Stockholder's Equity + Stock Purchased + Dividends
= $ 34000 + 42000 + 15600
= $ 91600
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