Acct 201-Exam #2 (B)-Fall 2017 Maxwell Smart, Attormey at Law, experienced the f
ID: 2572422 • Letter: A
Question
Acct 201-Exam #2 (B)-Fall 2017 Maxwell Smart, Attormey at Law, experienced the following transactions during 2014, the first year of operations. a) Accepted $48,000 on April 1, 2014 as a retainer for services to be performed evenly over the next 12 months. b) Paid the landlord of his new business condominium $18,000 on May 1, 2014 for a lease that runs for 12 months, ending 4/30V15 c) Performed legal services for cash of $54,000. d) Purchased $2,800 of office supplies on account. e) Paid $2,400 of the amount due on accounts payable. f Paid cash for operating expenses of $31,000 g) Determined that on 12/31/14, $200 of office supplies remained on-hand. Reguired: Calculate the total amount of revenue earned by Smart that is reported on the 2014 Income Statement. 1) Calculate the total amount of expenses reported by Smart on the December 31, 2014 income statement (Hint: Adjust for any deferrals paid by Smart). 2)Explanation / Answer
1 Total Revenue Earned Total Retainer Fee for Services For 1 April 2014 to 31st March 2015 48000 Less: Fee for 2015 3 Months ( 1 Jan to 31 March 2015) 12000 Retainer fee for Services for 2014 48000-12000 Retainer fee for Services for 2014 36000 Legal Services In cash 54000 Total Revenue 90000 2 Total Amount of Expenses for 2014 Lease Payment from 01/05/2004 to 30/04/2015 18000 Less: Lease payment for 2015 from 01/01/2015 to 30/04/2015 6000 Lease payment for 2014 18000-6000 Lease payment for 2014 12000 Purchases of Office Supplies 2800 Paid for Operating expenses 31000 Total Expenses 45800