Question
Salon opened during August 2019, and reported the following during the first month of operations: 1. On August 1, the salon owner contributed $5,000 cash
Salon opened during August 2019, and reported the following during the first month of operations:
1. On August 1, the salon owner contributed $5,000 cash and $15,000 of salon chairs in exchange for common stock. Salon uses the straight line method for depreciation and anticipates that the salon chairs will be used in operations for 6 years and will be worth $2,400 on the used market at the end of the 6 years.
2. On August 1 the company borrowed $50,000 for 8 months. The bank charged 6% interest with all principal and interest due at maturity (4/1/2020).
3. During August, Salon collected $9,200 of cash comprised of: $8,000 of cash received for August salon services rendered and $1,200 in cash representing an advance payment for salon services to be rendered for 10 bridesmaids at a wedding party scheduled for an October 2019 wedding.
4. During August, Salon performed $800 of services creating custom period specific wigs for a local theater production. All wig services are performed on account and Salon has not yet billed the theater company.
5. In early September 2019, Salon paid the salon employee's $2,250 in wages, 60% of the time paid relates to services performed in August and 40% relates to services performed in September.
What value will Salon report as total expenses for the month of August?
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