Question

Eric Shehan is a student working on an internship at Mahon Ltd. On December 31, 2020, the company had its year end. Eric's boss brought him the following information: Accounts Payable Cash Notes Payable Inventory Common Shares Sales Revenue Retained Earnings (at January 1, 2020) Cost of Goods Sold Utilities Expense Interest Revenue Accounts Receivable Interest Expense $219,000 Wages Expense 115,000 Notes Receivable 247,000 Rent Expense 311,000 Dividends Declared 352,000 Supplies 3,424,000 Insurance Expense 1,117,000 Equipment 2,049,000 Accumulated Depreciation, Equipment 87,000 Miscellaneous Expense 10,000 Unearned Revenue 425,000 Advertising Expense 6,000 $358,000 202,000 33,000 182,000 11,000 17,000 1,676,000 160,000 32,000 30,000 55,000 These account amounts are correct, but Eric's boss advised him that the information did not reflect the following information: 1. 2. 3. 4. 5. 6. 7. Accrued interest of $6,000 on the notes receivable. Employees earned $79,000 in bonuses based on achieving sales targets. These are payable on January 10, 2021. Accrued interest on the note payable amounting to $4,000 is due in January 2021. As of December 31, 2020, the supplies still on hand had a cost of $7,000. The insurance expense includes $4,000 in premiums related to coverage for 2021. Depreciation for 2020 is $167,000 on the equipment. The company's board declared additional dividends of $249,000, which are payable to shareholders on January 15, 2021.

Please solve this asap thanks.

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) Mahon Ltd. Statement of Income For the Year Ended December 31,2020 5 Revenue 7 Sales Revenue 3424000 3 Interest Revenue (10000+6000) 16000 Total Revenue 3440000 0 Expenses 1 Cost of goods sold 2049000 2 Utilities expense 87000 3 Interest expense (6000+4000) 10000 4 Wages expense (358000+79000) 437000 5 Rent expense 33000 6 Supplies expense 4000 7 Insurance expense (17000-4000) 13000 8 Miscellanous expense 32000 9 Advertising expense 55000 0 Depreciation expense 167000 1 Total expenses 2887000 2 Net Income 553000 4 Part 2) 5 ending retained earning balance 6 - beginning balance - net income - dividend - additional dividend 7 = 1117000 + 553000 -182000 - 249000 8 = $ 1239000 o Thus the correct answer is $12390000