Houston Company’s balance sheet includes the amounts shown below. Analysis of the company’s records reveals the...

Houston Company’s balance sheet includes the amounts shown below. Analysis of the company’s records reveals the following transactions during 2019, the company’s first year of operations: Cash received from customers, recorded as service revenue $217,650

Purchase of supplies for cash, expensed $ 19,000

Cash paid for salaries, expensed $ 85,400 At year-end, supplies on hand total $5,300, employees have earned $8,000 but have not yet been paid, and on the last day of the fiscal year, customers paid deposits of $8,700 for future promotions (this is included in total cash received from customers above) Accounts receivable increased by $33,000. Credit sales for the period were $415,000. What was the amount of cash that was collected from accounts receivable? Wages payable decreased by $12,500. Cash paid for wages in the period was $222,000. What was wage expense for the period? Unearned revenue increased by $13,100. Cash received for unrecorded revenue in the period was $43,700. How much unearned revenue was recorded as revenue during the period? Prepaid insurance increased by $28,400. Cash paid for prepaid insurance policies during the period was $121,000. What was insurance expense for the period?

Required: Determine the ending balance for service revenue, supplies expense and salary expense

Expert Solution

Questions asked in the Paragraph:

1. Amount of Cash collected from Accounts Receivable (AR) = Credit Sales - Increase in Accounts Receivable

= 415,000 - 33,000 => $382,000

2.Wage Expense for the Period = Cash Paid for wages in the Period - Decrease in Wages Payable

= 222,000 - 12,500 => $209,500

3.Unearned revenue recorded as revenue during the period = Cash received for Unrecorded Revenue in the Period - Increase in Unearned Revenue = 43,700 - 13,100 = $30,600

4. Insurance expense for the period = Cash paid for prepaid insurance policies during the period - Increase in Prepaid Insurance = 121,000 - 28,400 => $92,600

5. Service Revenue Balance at the End = Cash received from customers, recorded as service revenue - Deposits paid by Customer for future promotions = 217,650 - 8,700 => $208,950

6. Supplies expense = Purchase of supplies for cash, expensed - supplies on hand at year end

= 19,000 - 5,300 => $13,700

7. Salary Expense = Cash paid for salaries, expensed + Salaries Payable

= 85,400 + 8,000 = $93,400

ekkarill92 answered 1 year ago

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