Question

Use the following information for questions 21 - 25 regarding Trident River Co. in 2016 (assume this is the first year of operations for Trident River Co., and assume Trident River pays cash unless noted otherwise, even if it results in Trident River having a credit balance in cash): 1/1 Issued $100,000 of common stock. 2/1 Paid $9,600 to rent an office for one year. 3/1 Purchased $650 in supplies on account. By end of year, $90 worth of supplies is left. 7/1 Paid $21,200 for equipment, 4-year useful life, $2,000 residual value, straight-line depreciation 8/1 Billed customer $170,000 for services performed. 9/1 Received a $240,000 advance payment from a client for services that will be performed in 2017. 10/1 Received $80,000 from the 8/1 customer sale. 12/1 Paid $400 from the 3/1 purchase of supplies. 12/31 Accrued wages payable to employees of $3,600 21. What are Total Assets (including any contra-asset accounts) reported on the 2016 Balance Sheet? A. $507,290 B. $510,250 C. $498,490 D. $497,690 What is 2016 Net Income? A. $154,640 B. $158,240 C. $394,640 D. $154,550

Answer 1

Balance sheet
Liabilities	Amount	Amount	Assets	Amount	Amount
Common stock		100000	Equpment	21200
Net profit		154640	Less: Depriciation
Adavnce received		240000	(21200-2000)/4/2	2400	18800
Creditor		250	Closing stock	90	90
wages o/s		3600	Cash		388800
			Debtor		90000
			Prepaid Rent		800
Total		498490			498490

P& L A/c
To pur	650	By sales	170000
To wages	3600	By closing stock	90
To rent	8800
To deprication	2400
To np	154640
	170090		170090

ans. 21) Total assets of company is $498490/- i.e. option C is correct.

ans. 22) Net income = $154640. i.e OPtion A is correct.

ans. 23 ) Option D

  

Depriciation A/c --------- Dr	2400
To Accumulated Depriciation A/c		2400

ans 24) Option C.

Total Liab
Adavnce received		240000
Creditor		250
wages o/s		3600
		243850

Ans. 25) OPtion B.

  

Supplies Expenses a/c----------     DR	560
To Supplies A/c		560

Note: 1) Depriciation is charged for 6 months

2) Rent is paid for 12 months February. Therefore 1 month advance rent has been paid .