Question

Pak Co.'s professional fees expense account had a balance of $82,000 at December 31, Year 1, before considering year-end adjustments relating to the following: Consultants were hired for a special project at a total fee not to exceed $65,000. Pak has recorded $55,000 of this fee based on billings for work performed in Year 1. The attorney's letter requested by the auditors dated January 28, Year 2, indicated that legal fees of $6,000 were billed on January 15, Year 2 for work performed in November Year 1 and unbilled fees for December Year 1 were $7,000. What amount should Pak report for professional fees expense for the year ended December 31, Year 1

Answer 1

Answer:

$95,000

Explanation:

Given that,

Professional fees expense balance = $82,000

Billed amount for November, Year 1 = $6,000

Unbilled fees for Year 1 = $7,000

Professional fees expense for the year ended December 31, Year 1:

= Professional fees expense balance + Billed amount for November, Year 1 + Unbilled fees for Year 1

= $82,000 + $6,000 + $7,000

= $95,000

Therefore, the amount should Pak report for professional fees expense for the year ended December 31, Year 1 is $95,000.