Unadjusted trial balance as at December 31, 2018 for Travel Inc. :

Account Name	Debit	Credit
Cash	591,400
Accounts receivable	5,600
Note receivable	21,000
Trademark	40,000
Supplies	42,500
Accounts payable		27500
Long-term loan		220,000
Common shares		50,000
Retained earnings		22,000
Travel revenue		468,500
Rental revenue		230,000
Internet expense	63,000
Wage expense	205,000
Advertising expense	40,000
Supplies expense	9,500
Total amounts	1,018,000	1,018,000

Travel Inc. CEO hired you are as a new accountant. You discover the following new information that has not been incorporated when the above unadjusted trial balance was prepared.

(i) The insurance policy was purchased on April 1, 2018 for $9,500, which was incorrectly debited as the Supplies Expense account at the time of purchase. This insurance policy is valid for one year from April 1, 2018.

(ii) On November 1, 2018, Travel Inc. received $14,466 rent from its lessee for a 12-month lease beginning on that date. Travel Inc. incorrectly credited this amount into Retained Earnings.

(iii) The long-term loan was incurred on July 31, 2017. The loan carries an interest rate of 12% per year. The interest is payable at the end of each month and the principal is due on January 31, 2022.

(iv) On December 30, 2018, it was discovered that a customer purchased a ski trip from Travel Inc. On this date, the bookkeeper credited Travel Revenue in the amount of $1,550. The actual trip for the customer occurred on January 1, 2019.

(v) At December 31, 2018, wages accrued but unpaid were $4,275. To account for it, Travel Inc. incorrectly debited $4,275 advertising expenses.

(vi) Regarding note receivable, the agreement was signed on November 1, 2018. The agreement states that the annual interest is 12% and the interest is payable at the beginning of each month until the principal is repaid. The principal amount is due on November 1, 2022.

(vii) Advertising expense includes an invoice of $3,500 for the television commercial that aired in the month of December, 2017, whereas Internet expense includes an invoice of $100 for the internet service used in the month of January, 2019.

(viii) On July 1, 2018, Travel Inc. paid $21,500 to purchase Equipment that is useful for the next ten years since the purchase date, with the zero value left at the end of the useful life. On this date, this Equipment was incorrectly added to the Supplies account. The company uses the double-declining balance depreciation method.

(ix) On November 1, 2018, Travel Inc. paid $88,000 for the purchase of office supplies and debited this amount into the Wage Expense account. A physical count on December 31, 2018 revealed that $41,555-worth office supplies were remained at the warehouse. The transaction on November 1, 2018 was the only purchase event regarding office supplies during the fiscal year.

(x) Travel Inc. declared $15,000-worth stock dividends on December 30, 2018.

(xi) On December 31, 2018, Travel Inc. announced a four-for-one stock split.

Considering the above new information, prepare the income statement for the year ended on December 31, 2018 based on the newly calculated revenues and expenses.

Account information to be included: Travel revenue, Rental revenue, Interest revenue, Internet expense, Depreciation expense, Interest expense, Wage expense, Insurance expense, Supplies expense, and Advertising expense. Show all the work

Answer rating: 100% (QA)

Question Answers Travel Revenue 466950 Rental Revenue 232411 Interest Revenue 420 Internet expense 62900 Depreciation expense 2150 Interest expense 26... View the full answer