Question

E3-10 Recording Journal Entries and Determining Net Income [LO 3-2, LO 3-3) Cintu is a large marketer and distributor of food service products serving restaurants, hotels, schools, hospitals, and other institutions. The following transactions are typical of those that occurred in a recent year, but the amounts are simplified. a. Borrowed $125,000 from a bank, signing a short-term note payable. b. Provided $102,600 in service to customers, with $97.400 on account and the rest received in cash. c. Purchased equipment for $175,000 in cash. d. Incurred and paid employee wages of $2,250. e. Received $745 on account from a customer. f. Incurred and paid $4,200 cash for travel costs during the year. g. Paid $8,000 cash on accounts payable. h. Incurred $22,500 in utility expenses during the year, of which $16.900 was paid in cash and the rest owed on account Required: 1. For each of the above transactions, prepare accrual basis journal entries. 2. Calculate the company's preliminary net income. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the company's preliminary net income. Preliminary Not Income

Answer 1

Particulars	Dr	Cr
Cash	$125,000
Note payable		$125,000
(Short term note payable recorded)
Cash	$5,200
Accounts receivable	$97,400
Service revenue		$102,600
(Sales made to customer on account and for cash)
Equipment	$175,000
Cash		$175,000
(Equipment purchase in cash)
Wages expense	$2,250
Cash		$2,250
(Wages paid in cash)
Cash	$745
Accounts receivable		$745
(Cash received from customer)
Travel expense	$4,200
Cash		$4,200
(Travel expense paid in cash)
Accounts payable	$8,000
Cash		$8,000
(Accounts payable paid in cash)
Utilities expense	$22,500
Cash		$16,900
Accounts payable		$5,600
(Utilities expense party paid in cash and for the rest liability is created)

Income Statement
Service revenue	$102,600
Less: Expenses:
Wages expense	2,250
Travel expense	4,200
Utilities expense	22,500
Net Income	$73,650