Jorha Companys condensed income statement for the year ended November 30, 2014, is shown below. Jorha Company
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:
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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?
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...
Step by Step Answer:
JORHA COMPANY Income Statement For Year Ended November 30 2014 Fees earned 1 778500 Operating expens...View the full answer
Fundamental Accounting Principles Volume II
ISBN: 978-1259066511
14th Canadian Edition
Authors: Larson Kermit, Jensen Tilly
