GAAP Adjustments Quiz

QUESTION 2 10 points (Extra Credit) Save Answer On April 16, Joseph Carpenter formed a corporation, Carpenter Printing, to be operated as a printing business. On April 18, Carpenter Printing issued shares of common stock in exchange for $35,297 in cash; and $43,960 in office furniture, printing equipment, computers, and design software. The furniture and equipment have an estimated residual value of $6,020, and an estimated useful life of 8 years. The furniture and printing equipment, with software installed, will be delivered on May 2, and will be depreciated using the most common method. On April 20, Carpenter Printing signed a 1 year rental contract for office space, at a cost of $3,203 per month, beginning May 1. On April 21, Carpenter Printing signed a 1 year insurance contract for a comprehensive insurance policy with coverage beginning May 1. The cost of the insurance contract is $468. There a 2 options for making the insurance payment: half may be paid by May 2 and half plus a $14 fee may be paid by July 2; or the full amount may be paid by May 2. On April 22, after signing an agreement with its bank for Positive Pay, Carpenter Printing issued two checks. Check 101 paid the rent in advance for 3 months; Check 102 paid the full amount of the insurance payment. On April 25, the bank notied Carpenter Printing that 1 check(s) had been presented for payment, but that no electronic le for a check run had been received. Carpenter Printing sent the conrming electronic le to the bank on April 26. On May 5, Carpenter Printing's application for credit with a printing supplies vendor was approved and Carpenter Printing purchased supplies on account for $20,977. On May 10, Carpenter Printing printed brochures in a massive advertising campaign for the new business, using $5,196 of the supplies. What is the effect of these transactions on the Net Income on the Income Statement on May 31