Revenue Recognition and Matching} Carrico Advertising Inc. performs advertising services for several public companies. The following information
Question:
Revenue Recognition and Matching}
Carrico Advertising Inc. performs advertising services for several public companies. The following information describes Carrico's activities during 2018.
a. At the beginning of 2018 , customers owed Carrico \(\$ 45,800\) for advertising services performed during 2017. During 2018, Carrico performed an additional \(\$ 695,100\) of advertising services on account. Carrico collected \(\$ 708,700\) cash from customers during 2018.
b. At the beginning of 2018 , Carrico had \(\$ 13,350\) of supplies on hand for which it owed suppliers \(\$ 8,150\). During 2018, Carrico purchased an additional \(\$ 14,600\) of supplies on account. Carrico also paid \(\$ 19,300\) cash owed to suppliers for goods previously purchased on credit. Carrico had \(\$ 2,230\) of supplies on hand at the end of 2018 .
c. Carrico's 2018 operating and interest expenses were \(\$ 437,600\) and \(\$ 133,400\), respectively.
Required:
1. Calculate Carrico's 2018 income before taxes.
2. Calculate the amount of Carrico's accounts receivable, supplies, and accounts payable at December 31, 2018 3. CONCEPTUAL CONNECTION Explain the underlying principles behind why the three accounts computed in part 2 exist.
\section*{OBJECTIVE 3}
Exercise
Step by Step Answer:
Cornerstones Of Financial Accounting
ISBN: 9780176707125
2nd Canadian Edition
Authors: Jay Rich, Jefferson Jones, Maryanne Mowen, Don Hansen, Donald Jones, Ralph Tassone