Question

Revise the data in your spreadsheet based on the following assumptions, and then answer the questions that follow: Expenses: Advertising Expense $ 14,000 Assets: Cash $ 26,000 Insurance expense 20,000 Accounts receivable 24,000 Salaries expense 49,000 Supplies 15,000 Rent expense 10,000 Land 55,000 Liabilities: Salaries payable 12,000 Revenues: Service revenue 94,000 Notes payable 36,000 Interest revenue 9,000 Dividends: Dividends 9,000 Equity: Common stock 44,000 Retained earnings 27,000 Required:

1. What is the Net Income/(Loss)?

$27,000

$10,000

$13,000

$20,500

Assume the company has an increase in its Salaries Expense of 20% and a decrease in Service Revenue of 15%. Both of which will be settled after the year-end. Adjust and recalculate the balances in the Income Statement and Balance Sheet. All sales are on account.

2. What is the revised balance of the Service Revenue account?

$5,100

$79,900

$13,100

$31,100

3. What is the revised Net Income/(Loss)? $11,900 $(13,900) $17,900 $4,900 4. What is the revised balance in the Retained Earnings account?

$5,500

$10,500

$4,100

$18,500

Answer 1

Revised data Requirement 1 94000 9000 103000 Trial Balance For the period ending ... Particulars Debit in $ Credit in $ Cash 26000 Accounts receivable 24000 Supplies 15000 Land 55000 Salaries payable 12000 Notes payable 36000 Common stock 44000 Retained earnings 27000 Dividends 9000 Service revenue 94000 Interest revenue 9000 Advertising Expense 14000 Insurance expense 20000 Salaries expense 49000 Rent expense 10000 Totals 222000 222000 Statement of Income For the period ending ... Service revenue Interest revenue Total Revenue Less: Advertising Expense Insurance expense Salaries expense Rent expense Net Income 14000 20000 49000 10000 93000 10000

Requirement 2 Requirement 3 Cash 79900 9000 88900 Trial Balance For the period ending ... Particulars Debit in $ Credit in $ 26000 Accounts receivable 9900 Supplies 15000 Land 55000 Salaries payable 21800 Notes payable 36000 Common stock 44000 Retained earnings 27000 Dividends 9000 Service revenue 79900 Interest revenue 9000 Advertising Expense 14000 Insurance expense 20000 Salaries expense 58800 Rent expense 10000 Totals 217700 217700 Statement of Income For the period ending ... Service revenue Interest revenue Total Revenue Less: Advertising Expense Insurance expense Salaries expense Rent expense Net Income 14000 20000 58800 10000 102800 -13900 Statement of Retained Earnings For the period ending ... Beginning Balance 27000 Net Income - 13900 13100 Dividends -9000 4100

Amounts in $ Amounts in $ Balance sheet As at... Assets Current Assets Cash Accounts receivable Supplies 21800 Amounts in $ Amounts in $ Liabilities Current Liabilities 26000 Salaries payable 9900 15000 50900 Non Current Liabilities Notes payable 36000 Non Current Assets Land 55000 Shareholders Equity Common stock Retained earnings 105900 Total Liabilities & Equity 44000 4100 48100 105900 Total Assets