Question

The account balances for the Rogers International Company on January 31, 2016, follow. The balances shown are after the first month of operations. 101 Cash $ 18,475 401 Fees Income $ 30,925 111 Accounts Receivable 3,400 511 Advertising Expense 1,500 121 Supplies 2,150 514 Depr. Expense—Equip. 0 131 Prepaid Insurance 15,000 517 Insurance Expense 0 141 Equipment 24,000 518 Rent Expense 2,500 142 Accum. Depr.—Equip. 0 519 Salaries Expense 6,700 202 Accounts Payable 6,000 520 Supplies Expense 0 301 Maxine Rogers, Capital 40,000 523 Telephone Expense 350 302 Maxine Rogers, Drawing 2,000 524 Utilities Expense 850 Adjustments: a. Supplies used during the month amounted to $1,050. b. The amount in the Prepaid Insurance account represents a payment made on January 1, 2016, for six months of insurance coverage. c. The equipment, purchased on January 1, 2016, has an estimated useful life of 10 years with no salvage value. The firm uses the straight-line method of depreciation. 3. Complete the worksheet. 4.1 Prepare an income statement. 4.2 Prepare a statement of owner’s equity. 4.3 Prepare a balance sheet. 5.1 Journalize the adjusting entries for the year 2016. 5.2 Record the balances in the general ledger accounts. Analyze: If the useful life of the equipment had been 12 years instead of 10 years, how would net income have been affected? (Round your answer to 2 decimal places.)

Answer 1