The following account balances were taken from ABC Company\'s unadjusted trial b

Question

The following account balances were taken from ABC Company's unadjusted trial balance at December 31, 2020: ABC Company has not yet recorded adjusting entries related to the following two items: (1) $11,000 of supplies were used up during 2020 . (2) ABC Company has provided services to a customer totaling $14,000 as of December 31, 2020. However, the customer has not yet paid ABC Company. Calculate the net income reported by ABC Company for 2020 after the appropriate adjusting entries have been recorded and posted

Explanation / Answer

Calculation of Net income

Revenue:

sales [95000 + 14000] 109000

rental 46000 = 155000

less: cost of goods sold =   52000

   Gross profit = 103000

less: expenses

supplies expense 11000

insurance expense 21000

wage expense 38000

income tax expense 12000 = 82000

Net income = $21000

Note:-   Adjusting entries are as follows :

1 Supplies expense 11000 To Supplies 11000 2 Accounts receivable 14000 To sales revenue 14000

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