Question

The following information was drawn from the accounting records of Wyckoff Company as of December 31, Year 2, before the temporary accounts had been closed. The Cash balance was $5,680, and Notes Payable amounted to $3,900. The company had revenues of $3.770 and expenses of $2.290. The company's Land account had a $4,000 balance. Dividends amounted to $800. TH balance of the Common Stock account was $1,500. Required a. Identify which accounts would be classified as permanent and which accounts would be classified as temporary b. Assuming that Wyckoff's beginning balance (as of January 1, Year 2) in the Retained Earnings account was $3,600, determine its balance after the temporary accounts were closed at the end of Year 2 c. What amount of net income would Wyckoff Company report on its Year 2 income statement? Complete this question by entering your answers in the tabs below. Rega Req Bandc Identify which accounts would be classified as permanent and which accounts would be classified as temporary Classification Account Cash Notes Payable

Answer 1

1) Account Cash Notes Payable Revenues Expenses Land Dividends Common Stock Retained Earnings Classification Permanent Permanent Temporary Temporary Permanent Temporary Permanent Permanent Note: Revenues, expenses and dividends are closed to retained earnings account, hence they are temporary accounts.

А B i b) 2 Particulars Amount 3 Beginning balance of retained earnings $ 3,600 4 Add: Net income $ 1,480 5 Less: Dividends $ -800 6 Ending retained earnings $ 4,280 7 8C) 9 Particulars Amount 10 Revenues $ 3,770 11 Less: Expenses $ -2,290 12 Net income $ 1,480

А B 1 b) 2 Particulars Amount 3 Beginning balance of retained earnings 3600 4 Add: Net income =3770-2290 5 Less: Dividends -800 6 Ending retained earnings =+B3+B4+B5 7 8 C) 9 Particulars Amount 10 Revenues 3770 11 Less: Expenses -2290 12 Net income =+B10+B11