Question

Question No. (5) (15 minutes): The following account balances were obtained from the trial balance of Alfa Corporation at 31 December 2016. Supplies 1,000 Cash 32,000 Wages Expense 14,000 Dividends 16,000 Accounts Payable 22,000 Notes Payable 4,000 Retained Earnings, 1 Jan, 2016 8,000 Accounts Receivable ??? Rent Expense 6,000 Share Capital 20,000 Commissions Revenue 30,000 Required: Calculate at, or for the year ended, December 31, 2016 (a) Net income or Loss. (b) Retained Earnings. (c) Total Liabilities and Equity. (d) Accounts Receivable.

Answer 1

Amount $ 30,000 Answer: a) Caculation of Net Income Particulars Commission revenue Less: Expenses rent Expenses Wages Expenses Net Income $ 6,000 $ 14,000 $ 20,000 $ 10,000 b) Retain earnings Particulars Opening Balance Add: Current Year Less: Dividends Closing balance Amount $ 8,000 $ 10,000 $ 16,000 $ 2,000 Amount $ 16,000 $ 22,000 $ 4,000 C) Total Liability and Equity Particulars Dividend Account Pyable Notes Payable Total Liability Retaining Earnings Share Capital Total Equity Total Liablity and Equity $ 42,000 $ $ 2,000 20,000 $ 22,000 $ 64,000 d) Caculation of Account Receivables Cash+Supplies+Account receiavles = Total Liability + Equity Total Laibility and Equity - Cash - Supplies - Account Receivables $ 64,000 - $ 32,000 - $ 1,000 = $ 31000 Account Receivables = $ 31,000