Question
Exercise 2-17 (Algo) Accrual accounting income determination [LO2-5, 2-9] During the course of your examination of the financial statements of the Hales Corporation for the
Exercise 2-17 (Algo) Accrual accounting income determination [LO2-5, 2-9]
During the course of your examination of the financial statements of the Hales Corporation for the year ended December 31, 2024, you discover net income in 2024 is $44,000 but no adjusting entries have been prepared. To prepare adjusting entries, you discover the following items:
- An insurance policy covering three years was purchased on January 1, 2024, for $7,800. The entire amount was debited to insurance expense.
- During 2024, the company received a $950 cash advance from a customer for services to be provided in 2025. The $950 was credited to sales revenue.
- All purchases of supplies were debited immediately to supplies expense. However, you discover that supplies costing $1,040 were on hand on December 31.
- Hales borrowed $29,000 from a local bank on October 1, 2024. Principal and interest at 12% will be paid on September 30, 2025. No accrual was recorded for interest.
Required:
Determine the proper amount of net income for 2024.
Note: Amounts to be deducted should be indicated by a minus sign.
Exercise 2-17 (Algo) Accrual accounting income determination [LO2-5, 2-9] During the course of your examination of the financial statements of the Hales Corporation for the year ended December 31,2024. you discover net income in 2024 is $44,000 but no adjusting entries have been prepared. To prepare adjusting entries, you discover. the following items a. An insurance policy covering three years was purchased on January 1, 2024, for $7,800 The entire amount was debited to insurance expense b. During 2024, the company recelved a $950 cash advance from a customer for services to be provided in 2025 The $950 was credited to sales revenue c. All purchases of supplies were debited immediately to supplios expense. However, you discover that supplies costing $1,040 were on hand on December 31 d. Hales borrowed $29,000 from a local bank on October 1, 2024. Principal and interest at 12% will be paid on September 30,2025 No accrual was recorded for interest. Required: Determine the proper amount of net income for 2024 Note: Amounts to be deducted should be indicated by a minus sign
Exercise 2-17 (Algo) Accrual accounting income determination [LO2-5, 2-9]
During the course of your examination of the financial statements of the Hales Corporation for the year ended December 31, 2024, you discover net income in 2024 is $44,000 but no adjusting entries have been prepared. To prepare adjusting entries, you discover the following items:
- An insurance policy covering three years was purchased on January 1, 2024, for $7,800. The entire amount was debited to insurance expense.
- During 2024, the company received a $950 cash advance from a customer for services to be provided in 2025. The $950 was credited to sales revenue.
- All purchases of supplies were debited immediately to supplies expense. However, you discover that supplies costing $1,040 were on hand on December 31.
- Hales borrowed $29,000 from a local bank on October 1, 2024. Principal and interest at 12% will be paid on September 30, 2025. No accrual was recorded for interest.
Required:
Determine the proper amount of net income for 2024.
Note: Amounts to be deducted should be indicated by a minus sign.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To determine the proper amount of net income for 2024 for Hales Corporation we need to make the necessary adjusting entries for the provided items Let...
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
