Question

Jorha Company’s condensed income statement for the year ended November 30, 2014, is shown below.
Jorha Company
Income Statement
For Year Ended November 30, 2014
Fees earned........................................................................................................... $863,500
Operating expenses............................................................................................... 512,800
Net income........................................................................................................... $350,700
The liabilities reported on the November 30, 2014, balance sheet were:

Accounts payable ................................................................................................ $ 26,230
Mortgage payable................................................................................................. 328,698
Total liabilities..................................................................................................... $354,928

Louis Jorha, the owner, is looking for additional financing. A potential lender has reviewed Jorha’s accounting records and discovered the following:
a. Mortgage payments are made annually each December 1. The December 1, 2014, payment has not yet been made or recorded. A partial amortization schedule for the mortgage follows:


b. Fees earned included $85,000 received for work to be done in January and February 2015.
c. Accrued salaries at November 30, 2014, totaling $11,500 have not been recorded.
d. $7,000 of office supplies purchased on account were received November 28; this transaction was not recorded.
e. Annual property taxes of $17,500 are due each December 1; no property taxes have been included on the income statement.

Required
Using the information provided, prepare a corrected income statement and liabilities section of the balance sheet.
Analysis Component: If you were paid an annual bonus based on net income, what ethical dilemma would you face regarding the aboveitems?


$1.99
Sales0
Views94
Comments0
  • CreatedJanuary 08, 2015
  • Files Included
Post your question
5000