90.2K

Verified Solution

Link Copied!

Required information

Skip to question

$[$The following information applies to the questions displayed below.$]$

Golf Academy, Incorporated, provides private golf lessons. Its unadjusted trial balance at December $31,2021,$ follows, along with information about selected accounts.

Account Names Debit Credit Further Information

Cash $ $31,500$ As reported on December $31$ bank statement.

Supplies $520$ Based on count, only $$160$ of supplies still exist.

Deferred Revenue $ $3,060$ Of this amount, $$2,600$ was received for December lessons and $$460$ for January lessons.

Salaries and Wages Payable $0$ Employees were paid $$2,400$ for $10$ days of work through December $28.$ They have not yet been paid for work on December $29$ and $30.$

Income Tax Payable $0$ The company has paid last year$$s income tax but not this year$$s tax.

Interest Payable $0$ The company has not paid the $$110$ of interest owed on its notes payable for the current period.

Notes Payable $($long$-$term$)13,200$ This one$-$year note was taken out this year on December $1.$

Common Stock $1,000$ This amount was contributed for common stock in prior years.

Retained Earnings $2,600$ This is the balance reported at the end of last year.

Service Revenue $49,860$ Most customers pay cash for lessons each time they are provided, but some customers pay in advance.

Salaries and Wages Expense $35,700$ Employees worked through December $30$ but did not work on December $31.$

Supplies Expense $2,000$ This is the cost of supplies used through November $30.$

Interest Expense $0$ The company has not paid the $$110$ of interest owed on its notes payable for the current period.

Income Tax Expense $0$ The company has an average tax rate of $30\%.$

Totals $ $69,720$ $ $69,720$

$4-$a$.$ Calculate the adjusted net income that the company should report for the year ended December $31,2021.$

$4-$b$.$ By what dollar amount did the adjustments in requirement $3$ cause net income to increase or decrease?

Answer & Explanation Solved by verified expert

See Answer