Question

The following account balances were taken from ABC Company’s unadjusted trial
balance at December 31, 2020:

Accounts Payable ............  $56,000
Accounts Receivable .........  $42,000
Cash ........................  $11,000
Common Stock ................  $63,000
Cost of Goods Sold ..........  $52,000
Income Tax Expense ..........  $12,000
Insurance Expense ...........  $21,000
Inventory ...................  $70,000
Land ........................  $68,000
Mortgage Payable ............  $49,000
Patent ......................  $31,000
Prepaid Insurance ...........  $17,000
Rental Revenue ..............  $46,000
Retained Earnings ...........  $72,000 (at January 1, 2020)
Sales Revenue ...............  $95,000
Supplies ....................  $19,000
Wage Expense ................  $38,000

ABC Company has not yet recorded adjusting entries related to the following
two items:

(1)  $11,000 of supplies were used up during 2020.

(2)  ABC Company has provided services to a customer totaling $14,000 as of
     December 31, 2020. However, the customer has not yet paid ABC Company.

Calculate the net income reported by ABC Company for 2020 after the appropriate
adjusting entries have been recorded and posted.

Answer 1

Adjusting Entries
Date	General Journal	Debit	Credit
31-Dec	Supplies Expense	$ 11,000.00
	Supplies		$    11,000.00
	(Supplies Consumed)
31-Dec	Accounts Receivable	$ 14,000.00
	Service Revenue		$    14,000.00
	(Service revenue Recorded)

ABC Company
Income Statement
For the Year ended Dec 31 2020
Revenues
Sales revenue	$ 95,000.00
Cost of Goods Sold	$ 52,000.00
Gross Profit	$ 43,000.00
Other Revenues
Service Revenue	$ 14,000.00
Rental Revenue	$ 46,000.00
Total Revenue		$ 103,000.00
Operating Expenses
Insurance Expense	$ 21,000.00
Supplies Expense	$ 11,000.00
Wage Expense	$ 38,000.00
Total Operating Expenses		$    70,000.00
Income Before Taxes		$    33,000.00
Income tax Expense		$    12,000.00
Net Income		$    21,000.00

Answer – Net income after adjustments is $ 21,000.