The following transactions for Habari Company occurred during January 2017: Jan

Question

The following transactions for Habari Company occurred during January 2017: Jan 1 Purchased a two-year insurance policy for cash, $8,400 Jan 4 Paid utilities bill that was received in December 2015, $450 Jan 9 Performed a service on account, $12,000 Jan 16 Paid monthly salary to employees, $2,700. Jan 21 Received $18,000 from a customer on account. Jan 25 Received $600 from January 9 transaction. Jan 31 Prepared the adjusting entry for insurance from January 1 transaction. Jan 31 Accrued wages of $2,750 Do not enter commas, spaces, decimals, or dollar signs in your answer. For example, if your answer is $2,333, then enter it as 2333 If your answer is negative, i.e. a net loss of $2,333, then enter your answer in brackets withoutcommas, spaces, decimals, or dollar signs as: (2333) What is the amount of income under the accrual basis?

Explanation / Answer

Income under accrual basis = service revenue - salary to employees - insurance expense for January - accrued wages

= 12000-2700-(8400/24)-2750

= 12000-2700-350-2750

= $6,200

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