(Learning Objective 3, 4: Computing financial statement amounts) The accounts of Gleneagles Company prior to the year-end adjustments follow on the next page. Adjusting data at the end of the year include:
a. Unearned service revenue that has been earned, $1,000.
b. Accrued service revenue, $2,000.
c. Supplies used in operations, $3,000.
d. Accrued salary expense, $3,000.
e. Perpaid insurance expired, $1,000.
f. Depreciation expense—building, $2,000.
Accumulated depreciation building
Depreciation expense building
Unearned service revenue
Mack Shaughnessy, the principal stockholder, has received an offer to sell Gleneagles Company. He needs to know the following information within 1 hour:
a. Net income for the year covered by these data
b. Total assets
c. Total liabilities
d. Total stockholders’ equity
e. Proof that total assets = total liabilities + total stockholders’ equity after all items are updated.
Without opening any accounts, making any journal entries, or using a work sheet, provide Mr. Shaughnessy with the requested information. The business is not subject to income tax. Show all computations.
Freddie Handel began a music business in July 20X4. Handel prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Handel Company’s only activities during January through April:
Bought music on account for $10, with payment to the supplier due in 90 days.
Performed a job on account for Joey Bach for $25, collectible from Bach in 30 days. Used up all the music purchased on Jan. 14.
Collected the $25 receivable from Bach.
Paid the $10 owed to the supplier from the January 14 transaction.