The following accounts are taken from the December 31, 2010, financial statement
ID: 2487765 • Letter: T
Question
The following accounts are taken from the December 31, 2010, financial statements of A to Z Advertising Company Cash Accounts receivable Interest expense Accounts payable Operating expenses Unearned revenue Equipmen Income tax expense 48,282 1,696 7,476 2,389 5,180 38,360 1,358 19,848 2,506 The following activities occurred in 2011: Billed customers for advertising services rendered, $56,800. 2. Received cash from customers in payment of their accounts, $11,300. 3. Incurred $45,900 of operating expenses of which $39,900 was paid in cash and $6,000 was on account and unpaid as of the end of the year. 4. Paid suppliers $6,800 on the accounts payable. 5. Received deposits from customers of $2,680 for advertising services to be performed in 2012. value: 2.50 points What is the amount of Net Income for the year ended December 31, 2010? O $17398 $17,398 O $5,027 $9,922 $10.252 9. 2s0 points value: 2.50 points What is the amount of Accounts receivable at the end of 2011? $47150 O $56,800 o $56,800 $52.976 O $45,500Explanation / Answer
8. Net income for the year ended dec 31 st 2010=Advertsing revenue-Operating expenses-Interest-Tax expense
=$48,282-$38,360-$2,506-$2,389=$5,027
9.the amount receivablle at end 2011=Opening receivable+Current year bills-amount received
=$7,476+$56,800-$11,300=$52,796
10. Sales=$283,000
Gross profit=$303,000*37%=$112,110
Cost of goods sold=sales-Gross profit=$303,000-$112,110=$190,890
assumption Opening inventory=NIl
Amount of ending inventory=Purchases -Cost of goods sold=$283,000-$190,890=$92,110