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Orlov [11]
3 years ago
6

On December 31, 2022, Monty Company prepared an income statement and balance sheet and failed to take into account three adjusti

ng entries. The incorrect income statement showed net income of $44,000. The balance sheet showed total assets, $166,400; total liabilities, $66,000; and stockholders’ equity, $100,400. The data for the three adjusting entries were: (1) Depreciation of $9,720 was not recorded on equipment. (2) Salaries and wages amounting to $10,720 for the last two days in December were not paid and not recorded. The next payroll will be in January. (3) Rent of $7,520 was paid for two months in advance on December 1. The entire amount was debited to Prepaid Rent when paid.

Business
1 answer:
irga5000 [103]3 years ago
5 0

Answer:

Salaries and Wages are owed so they are now liabilities. They are also expenses and will reduce the Net Income.

Rent Revenue was in advance for 2 months meaning one of those months will be December which is in the current period so;

= 7,520/2

= $3,760 will be added to net income for the year

The same amount will be removed from Liabilities as the revenue has now been recognized.

Depreciation reduces the value of Fixed assets so will be deducted from Assets.

It is also an expense so it will reduce Net Income.

Whatever happens to Net Income will happen to Stockholders' equity as well because Net Income is an Equity account.

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2 years ago
Read 2 more answers
On April 2, the company prepaid $9,000 cash for twelve months' rent for office space. b) The balance in Prepaid insurance repres
shepuryov [24]

Missing information:

Karla Tanner opens a web consulting business called Linkworks and recorded the following transactions in its first month of operations.

Apr. 1 Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock.

Apr. 2 The company prepaid $9,000 cash for twelve months’ rent for office space. The company's policy is record prepaid expenses in balance sheet accounts.

Apr. 3 The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days.

Apr. 6 The company completed services for a client and immediately received $4,000 cash.

Apr. 9 The company completed a $6,000 project for a client, who must pay within 30 days.

Apr. 13 The company paid $11,600 cash to settle the account payable created on April 3.

Apr. 19 The company paid $2,400 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts.

Apr. 22 The company received $4,400 cash as partial payment for the work completed on April 9.

Apr. 25 The company completed work for another client for $2,890 on credit.

Apr. 28 The company paid $5,500 cash in dividends.

Apr. 29 The company purchased $600 of additional office supplies on credit.

Apr. 30 The company paid $435 cash for this month’s utility bill.

Journalize, and prepare income statement and balance sheet

Answer:

Apr. 1 Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock.

Dr Cash 80,000

    Cr Common stock 80,000

Apr. 2 The company prepaid $9,000 cash for twelve months’ rent for office space. The company's policy is record prepaid expenses in balance sheet accounts.

Dr Prepaid rent 9,000

    Cr Cash 9,000

Apr. 3 The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days.

Dr Equipment 8,000

Dr Supplies 3,600

    Cr Accounts payable 11,600

Apr. 6 The company completed services for a client and immediately received $4,000 cash.

Dr Cash 4,000

    Cr Service revenue 4,000

Apr. 9 The company completed a $6,000 project for a client, who must pay within 30 days.

Dr Accounts receivable 6,000

    Cr Service revenue 6,000

Apr. 13 The company paid $11,600 cash to settle the account payable created on April 3.

Dr Accounts payable 11,600

    Cr Cash 11,600

Apr. 19 The company paid $2,400 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts.

Dr Prepaid insurance 2,400

    Cr Cash 2,400

Apr. 22 The company received $4,400 cash as partial payment for the work completed on April 9.

Dr Cash 4,400

    Cr Accounts receivable 4,400

Apr. 25 The company completed work for another client for $2,890 on credit.

Dr Accounts receivable 2,890

    Cr Service revenue 2,890

Apr. 28 The company paid $5,500 cash in dividends.

Dr Dividends 5,500

    Cr Cash 5,500

Apr. 29 The company purchased $600 of additional office supplies on credit.

Dr Supplies 600

    Cr Accounts payable 600

Apr. 30 The company paid $435 cash for this month’s utility bill.

Dr Utilities expense 435

    Cr Cash 435

Adjusting entries:

a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space.

Dr Rent expense 750

    Cr Prepaid rent 750

b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy the policy's coverage began on April 1.

Dr Insurance expense 200

    Cr Prepaid insurance 200

c) Office supplies on hand as of April 30 total $1,200.

Dr Supplies expense 3,000

    Cr Supplies 3,000

d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month.

Dr Depreciation expense 500

    Cr Accumulated depreciation - equipment 500

e) The company has completed work for a client, but has not yet billed the $1,800 fee.

Dr Accrued income 1,800

    Cr Service revenue 1,800

f) Wages due to employees, but not yet paid, as of April 30 total $2,600.

Dr Wages expense 2,600

    Cr Wages payable 2,600

                 Linkworks

            Income Statement

For the month ended April 30th, 202x

Service revenue             $14,690

Wages expense             ($2,600)

Supplies expense          ($3,000)

Depreciation expense      ($500)

Insurance expense           ($200)

Rent expense                    ($750)

<u>Utilities expense               ($435)</u>

Net income                      $7,205

retained earnings = $7,205 - $5,500 (dividends) = $1,705

                   Linkworks

               Balance Sheet

For the month ended April 30th, 202x

Assets:

Cash $59,465

Accounts receivable $4,490

Accrued income $1,800

Prepaid rent $8,250

Prepaid insurance $2,200

Supplies $1,200

Equipment net $7,500

Total assets: $84,950

Liabilities and stockholders' equity:

Accounts payable $600

Wages payable $2,600

Common stock $80,000

Retained earnings $1,705

Total liabilities and stockholders' equity: $84,905

3 0
3 years ago
Which economic indicator measures inactivity rather than activity ?
Reil [10]
B, unemployment rate.
5 0
3 years ago
Choose the preferred sentence from each pair and justify your choice. a. (1) Lindsay's request to telecommute was denied, but sh
mr_godi [17]

Answer:

(2). Although her request to telecommute was denied, Lindsay will begin a flextime schedule in two weeks.

Explanation:

The second choice would be the most preferred as it conveys the idea in a formal and precise manner. <u>The complex sentence beginning with the subordinate clause already hints the listener that the key message is yet to come. It helps him/her in understanding the intended message without any confusion</u>. The first sentence fails to create that specificity as it connects two independent ideas which remove the listener's focus from the main idea i.e. 'she will begin a flextime schedule in two weeks.' Thus, option (2) adopts the correct format and sentence structure to deliver the message effectively, efficiently, and precisely.

4 0
3 years ago
The LaGrange Corporation had the following budgeted sales for the first half of the current year:
Oxana [17]

Answer:

$168,250

Explanation:

Total Cash Collection would include cash collected from both Cash Sales and Credit Sales.

<u>Summary for Calculation of January Cash Collected</u>

Cash Sales                                                        $60,000

Credit Sales :

For January Sales ($160,000 × 45%)              $72,000

For December Sales ($55,000 × 55%)           $30,250

For November Sales ($30,000 × 20%)             $6,000

Total Collection                                               $168,250

Conclusion :

The total cash collected during January by LaGrange Corporation would be $168,250

3 0
3 years ago
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