Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

During the course of your examination of the financial statements of Trojan Corporation for the year ended December 31, 2018, you come across several items

image text in transcribed

During the course of your examination of the financial statements of Trojan Corporation for the year ended December 31, 2018, you come across several items needing further consideration. Currently, net income is $98,000. a. An insurance policy covering 12 months was purchased on October 1, 2018, for $22,800. The entire amount was debited to Prepaid Insurance and no adjusting entry was made for this item in 2018. b. During 2018, the company received a $3,800 cash advance from a customer for services to be performed in 2019. The $3,800 was incorrectly credited to Service Revenue. c. There were no supplies listed in the balance sheet under assets. However, you discover that supplies costing $2,650 were on hand at December 31, 2018. d. Trojan borrowed $68,000 from a local bank on September 1, 2018. Principal and interest at 12% will be paid on August 31, 2019. No accrual was made for interest in 2018. Required: Using the information in a through d. above, determine the proper amount of net income as of December 31, 2018. (Amounts to be deducted should be indicated with a minus sign.) Net income (unadjusted) a. Adjustment for insurance b. Adjustment for deferred revenue c. Adjustment for supplies d. Adjustment for interest Net income (adjusted)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Organizational Behavior Improving Performance And Commitment In The Workplace

Authors: Jason Colquitt

8th Edition

126412435X, 9781264124350

More Books

Students also viewed these Accounting questions