An insurance policy covering three years was purchased on January 1, 2011, for $6,000. The entire amount was debited to insurance expense and no adjusting entry was made for this item.
Dr Prepaid Insurance 4,000
Cr Insurance Expense 4,000
During 2011, the company received a $1,000 cash advance from a customer for merchandise to be manufactured and shipped in 2012. The $1,000 was credited to sales revenue. No entry was made for the cost of merchandise.
Dr Sales Revenue 1.000
Cr Unearned Revenue 1,000
There were no supplies listed in the balance sheet under assets. However, you discover that supplies costing $750 were on hand at December 31.
Dr Supplies 750
Cr Supplies Expense 750
Hales borrowed $20,000 from a local bank on October 1, 2011. Principal and interest at 12% will be paid on September 30, 2012. No accrual was made for interest.
20,000 x 12% x 3/12 = 600 accrued interest
Dr Interest Expense 600
Cr Interest Payable 600
Net income reported in the 2011 income statement $30,000 before reflecting any of the above items.
Determine the proper amount of net income for 2011. Net Income before = $30,000, Net Income after = $33,150. What are the steps to come to the final net income of $33,150.
30,000 + 4,000 - 1,000 + 750 - 600 = 33,150