Question
1.The Grandville Company is a consulting company. Grandville adjusts its accounting records on an annual basis at 12/31, the end of its fiscal year. During
1.The Grandville Company is a consulting company. Grandville adjusts its accounting records on an annual basis at 12/31, the end of its fiscal year. During 2022, the Grandville Co. had the following information about cash receipts and cash disbursements: 2022 Cash collected from clients on billings $3,700,000 Cash received from borrowing via a bank loan 400,000 Cash received for interest on the note receivable ? Cash received for repayment of the note receivable 500,000 Cash paid for purchase of office equipment (purchase date was 1/1/2022) 800,000 Cash paid for advertising 200,000 Cash paid for salaries 1,900,000 Cash paid for rent 408,000 Additional information: During 2022, Grandville Co. billed clients $4,300,000 for services rendered in 2022. Grandville began 2022 with a balance in Accounts Receivable of $400,000. Grandville anticipates no bad debts from extending credit to its clients. During 2022, Grandville incurred $250,000 in advertising costs related to advertising that ran in 2022. Grandville began 2022 with a $70,000 balance due to the advertising company. The $408,000 rent payment in 2022 was for 1 year of rent, running Oct. 1, 2022 to Sept. 30, 2023. Grandville has a policy of recording all prepayments of rent as rent expense. There was no balance in salaries payable at 1/1/2022 or at 12/31/2022. The bank loan that Grandville took out in 2022 was a 6-month note requiring principal and interest at 6% to be repaid at the maturity date of March 1, 2023. Grandville uses straight-line depreciation on the office equipment and a 5 year useful life with no estimated residual value. Grandville began 2022 with a balance in Notes Receivable of $500,000. The $500,000 note receivable originated on 5/1/2019 related to a loan to one of Grandville's clients. The note is a three-year note requiring annual interest payments on 5/1 at 8% and repayment of the principal at maturity. REQUIREMENTS: Follow the requirements provided in Question 1 (1a-1c) for Grandville Co. (a fictitious company). Your answers may be legibly hand-written in the formatting provided or typed. You must provide supporting calculations as required in 1c. 1a. Provide all of Grandville's journal entries related to the information above. Account name Debit Credit 1b. Provide all of Grandville's adjusting journal entries at 12/31/2022. Account name Debit Credit 1c. What is the amount of Net Income that Grandville would report on its 2022 Income Statement? (Show work/calculations to support your answer) Net Income
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started