Question

In: Accounting

Debit Credit Cash 4,400 Accounts Receivable 2,000 Prepaid Insurance 1,600 Equipment 15,000 Accumulated Depreciation - Equipment...

Debit

Credit

Cash

4,400

Accounts Receivable

2,000

Prepaid Insurance

1,600

Equipment

15,000

Accumulated Depreciation - Equipment

3,000

Accounts Payable

2,400

Note Payable

3,920

Unearned Fees

3,200

Common Stock

5,000

Retained Earnings

2,700

Dividends

2,000

​

Fees Earned

37,000

Wages Expense

19,000

Depreciation Expense

1,800

Utilities Expense

320

Insurance Expense

700

Maintenance Expense

7,700

Income Tax Expense

2,700

  

57,220

57,220

Use the Adjusted Trial above to calculate the Net Income (or Net Loss), and the Retained Earnings balance.

Solutions

Expert Solution

Net Income = $4,780 -->Refer working note 1

Retained earnings = $5,480 -->Refer working note 2

.

.

Working note 1 - Calculation of Net Income / (loss)
Revenues:
   Fees Earned $37,000
Expenses:
   Wages Expense $19,000
   Depreciation Expense $1,800
   Utilities Expense $320
   Insurance Expense $700
   Maintenance Expense $7,700
   Income Tax Expense $2,700
Total expenses $32,220
Net Income      [Total revenues - Total expenses = $37,000 - $32,220] $4,780

.

.

Working note 2 - Calculation of retained earnings balance
Retained Earnings at the beginning of the year $2,700
Add: Net Income         [Refer working note 1]] $4,780
$7,480
Less: Dividends $2,000
Retained Earnings at the end of the year $5,480

ekkarill92 answered 3 years ago
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