Question
Below is the unadjusted trial balance of FOURCO. Debit Credit Cash $18,300 Accounts receivable 27,000 Prepaid rent 5,000 Office supplies 1,200 Equipment 21,800 Accumulated depreciation
Below is the unadjusted trial balance of FOURCO.
Debit | Credit | |
Cash | $18,300 | |
Accounts receivable | 27,000 | |
Prepaid rent | 5,000 | |
Office supplies | 1,200 | |
Equipment | 21,800 | |
Accumulated depreciation | $6,000 | |
Notes payable | 8,000 | |
Accounts payable | 3,000 | |
Unearned fees | 14,000 | |
Capital stock | 18,000 | |
Retained earnings | 16,000 | |
Fees earned | 30,000 | |
Salaries expense | 14,000 | |
Utilities expense | 2,000 | |
Insurance expense | 5,800 | |
Totals | $96,000 | $96,000 |
FOURCO signed a note payable at the beginning of the current month. The note carries an interest rate of 6%. The note and all of the interest are due in three months. Which is the correct adjusting journal entry to record interest for the current month?
Debit Interest expense 160 and credit Interest payable 160
Debit Interest expense 480 and credit Interest payable 480
Debit Interest expense 40 and credit Interest payable 40
Debit Interest expense 120 and credit Interest payable 120
After all of the adjusting entries are posted, what will be the amount of net income that FOURCO reports on its income statement?
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