The following account balances were taken from ABC Company’s accounting records
ID: 2418557 • Letter: T
Question
The following account balances were taken from ABC Company’s accounting records at December 31, 2008: Accounts Payable ............ $58,000 Accounts Receivable ......... $64,000 Advertising Expense ......... $14,000 Building .................... $54,000 Cash ........................ $30,000 Common Stock ................ $94,000 Cost of Goods Sold .......... $45,000 Dividends ................... $12,000 Equipment ................... $68,000 Income Tax Expense .......... $17,000 Interest Revenue ............ $36,000 Inventory ................... $62,000 Notes Payable ............... $82,000 Rent Expense ................ $10,000 Retained Earnings ........... $40,000 (at January 1, 2008) Sales Revenue ............... $99,000 Salaries Expense ............ $22,000 Salaries Payable ............ $13,000 Supplies .................... $19,000 Trademark ................... $32,000 Unearned Revenue ............ $27,000 ABC Company has not yet recorded year-end adjusting entries related to the following two items: (1) Based on a physical count, ABC Company determined there were only $10,000 of supplies still on hand and available to be used as of December 31, 2008. (2) The unearned revenue relates to a $27,000 payment from a customer received on May 1, 2008 for work to be performed each month for the next 18 months. Calculate the net income reported by ABC Company for 2008 after the appropriate adjusting entries have been recorded and posted. Do not use decimals in your answer.
Explanation / Answer
Journal entries:
To Supplies
(19,000 - 10,000)
Income statement
Sales revenue (99,000+12,000) $111,000
Add:Interest revenue 36,000
total revenue $147,000
Less:Expenses:
Cost of goods sold 45,000
Advertising expense 14,000
Supplies expense 9,000
Rent expense 10,000
Salary expense 22,000
Income tax expense 17,000 (117,000)
Net income $30,000
Supplies expense $9,000To Supplies
(19,000 - 10,000)
$9,000 Unearned revenue $12,000 To Sales revenue $12,000