The Skies Company reported net income of $58,200 for the year ended December 31, 2080. An analysis of the firm's books and related records disclosed that certain adjust- ments were not made at year end; therefore, reported net income was incorrect.

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REQUIRED: Using the method illustrated in Figure 6 of your text, prepare a bal-

ance sheet as of December 31, 2080, on the forms provided at the back of this

unit. Then answer questions 8-10. DO NOT send the work forms to us.

8. The total current liabilities for the Mahoney Corporation

are

A.

$51,000.

C.

$69,400.

B.

$68,000.

D.

$78,000.

9. In which section of the balance sheet should the accumulated depredation account be

shown?

A.

Current asset

C.

Current liability

B.

Plant or fixed asset

D.

Deferred charge

10. The Sinking Fund Cash account is properly classified as a

A. current asset.

C.

current habikty.

B.

plant asset.

D.

long-term investment.

Base your answer to question

11

on the following Information:

The Skies Company reported net income of $58,200 for the year ended December 31,

2080. An analysis of the firm's books and related records disclosed that certain adjust-

ments were not made at year end; therefore, reported net income was incorrect. The

following errors and omissions were made.

a.

Accrued interest earned on investments amounted to $205, but the amount wasn't

recorded.

b.

Depreciation of $370 on machinery wasn't recorded.

c.

Rent revenue of $220 was received in advance and credited to the

Rent Revenue

account.

d.

Semiannual bond payable interest of $1,820 was paid, but the amount wasn't

recorded.

e.

The unexpired Insurance premium at year end totaled $440. The total Insurance

premium was debited to the Insurance Expense account during the year.

I.

Office supplies expense for the year amounted to $690. The firrn debits an asset

account whenever office supplies are purchased. The entry for supplies used must

be made at year end.

REQUIRED: Prepare a statement for the year ended December 31, 20X0, to

show

the corrected net Income, taking into account the adjustments listed. Use the

form at the back of this unit. Them answes question 11. DO NOT send your work

form to us.

11. The coirected net Income for the year, after adjustments, would be

A.

$55,125.

C.

$57,140.

B. $55,745.

D.

$57,345

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