Interest income received by a cash basis taxpayer is generally reported in the tax year it is received. True False
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Answer:
Since so much information is missing, i looked for similar questions.
Adjusting entries should be:
Dr Supplies expense 6,950
Cr Supplies 6,950
Dr Advertising expense 2,500
Cr Prepaid advertising 2,500
Dr Rent expense 2,100
Cr Prepaid rent 2,100
Dr Depreciation expense 220
Cr Accumulated depreciation, equipment 220
The adjusted trial balance:
debit credit
Cash 35,900
Accounts receivables 13,000
Supplies 1,600
Prepaid advertising 7,500
Prepaid rent 19,500
Equipment 26,400
Accumulated dep. 220
Accounts payable 15,950
Paula Judge, capital 60,400
Paula Judge, drawings 7,400
Fees income 58,200
Advertising expense 2,500
Depreciation expense 220
Rent expense 2,100
Salaries expense 10,100
Supplies expense 6,950
Utilities expense <u> 1,600 </u> <u> </u>
Totals $134,770 $134,770
Judge Creative Designs
Income Statement
For the month ended January 31, 2019
Revenues $58,200
Operating expenses:
- Advertising expense $2,500
- Depreciation expense $220
- Rent expense $2,100
- Salaries expense $10,100
- Supplies expense $6,950
- Utilities expense $1,600 <u> $23,470</u>
Net income $34,730
Judge Creative Designs
Statement of Owner's Equity
For the month ended January 31, 2019
Paula Judge, capital beginning balance $60,400
Net income <u>$34,730</u>
Subtotal $95,130
Drawings <u>($7,400)</u>
Paula Judge, capital January 31, 2019 $87,730
Judge Creative Designs
Balance Sheet
For the month ended January 31, 2019
Assets:
Cash $35,900
Accounts receivables $13,000
Supplies $1,600
Prepaid advertising $7,500
Prepaid rent $19,500
Equipment, net $26,180
Total assets $103,680
Liabilities:
Accounts payable $15,950
Equity:
Paula Judge, capital $87,730
Total liabilities and equity $103,680
If the adjusting entries had not been made, net income would have been overstated.
