During the course of your examination of the financial statements of Trojan Corporation for the year ended

Question:

During the course of your examination of the financial statements of Trojan Corporation for the year ended December 31, 2021, you come across several items needing further consideration. Currently, net income is $100,000.
1. An insurance policy covering 12 months was purchased on October 1, 2021, for $24,000. The entire amount was debited to Prepaid Insurance and no adjusting entry was made for this item in 2021.
2. During 2021, the company received a $4,000 cash advance from a customer for services to be performed in 2022. The $4,000 was incorrectly credited to Service Revenue.
3. There were no supplies listed in the balance sheet under assets. However, you discover that supplies costing $2,750 were on hand at December 31, 2021.
4. Trojan borrowed $70,000 from a local bank on September 1, 2021. Principal and interest at 9% will be paid on August 31, 2022. No accrual was made for interest in 2021.


Required:
Using the information in 1 through 4 above, determine the proper amount of net income as of December 31, 2021.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Fantastic news! We've located the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Financial Accounting

ISBN: 978-1259914898

5th edition

Authors: David Spiceland, Wayne M. Thomas, Don Herrmann

Question Posted: