#28 Fresha, Inc. has been using the accrual basis of accounting. However, an examination of the records reveals that some expenses and revenues have been handled on a cash basis by the inexperienced bookkeeper of the company. Income statements prepared by the bookkeeper reported 174,000 net income for 2017 and 222,000 net income for 2018. Further review of the records reveals that the following items were handled improperly. Rent of 7,800 was received from a lessee on December 23, 2017. It was recorded as income at that time even though the rental pertains to 2018. Salaries payable on December 31 have been consistently omitted from the records of that date and have been recorded as expenses when paid in the following year. The salary accruals recorded in this manner were: December 31, 2016 6,600 December 31, 2017 9,000 December 31, 2018 5,640 Invoices for office supllies purchased have been charged to expense accounts when received. Inventories of supplies on hand at the end of each year have been ignored, and no entry has been made for them. December 31, 20167,800 December 31, 20172,640 December 31, 20188,520 What is the corrected net income for 2018? Answer: 237,240 Pls provide solution and explanation for the answer above
#28 Fresha, Inc. has been using the accrual basis of accounting. However, an examination of the records reveals that some expenses and revenues have been handled on a cash basis by the inexperienced bookkeeper of the company. Income statements prepared by the bookkeeper reported 174,000 net income for 2017 and 222,000 net income for 2018. Further review of the records reveals that the following items were handled improperly. Rent of 7,800 was received from a lessee on December 23, 2017. It was recorded as income at that time even though the rental pertains to 2018. Salaries payable on December 31 have been consistently omitted from the records of that date and have been recorded as expenses when paid in the following year. The salary accruals recorded in this manner were: December 31, 2016 6,600 December 31, 2017 9,000 December 31, 2018 5,640 Invoices for office supllies purchased have been charged to expense accounts when received. Inventories of supplies on hand at the end of each year have been ignored, and no entry has been made for them. December 31, 20167,800 December 31, 20172,640 December 31, 20188,520 What is the corrected net income for 2018? Answer: 237,240 Pls provide solution and explanation for the answer above
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
#28
Fresha, Inc. has been using the accrual basis of accounting. However, an examination of the records reveals that some expenses and revenues have been handled on a cash basis by the inexperienced bookkeeper of the company. Income statements prepared by the bookkeeper reported 174,000 net income for 2017 and 222,000 net income for 2018. Further review of the records reveals that the following items were handled improperly.
- Rent of 7,800 was received from a lessee on December 23, 2017. It was recorded as income at that time even though the rental pertains to 2018.
- Salaries payable on December 31 have been consistently omitted from the records of that date and have been recorded as expenses when paid in the following year. The salary accruals recorded in this manner were:
December 31, 2016 6,600
December 31, 2017 9,000
December 31, 2018 5,640
- Invoices for office supllies purchased have been charged to expense
accounts when received. Inventories of supplies on hand at the end of each year have been ignored, and no entry has been made for them.
December 31, 20167,800
December 31, 20172,640
December 31, 20188,520
What is the corrected net income for 2018?
Answer: 237,240
Pls provide solution and explanation for the answer above
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education