4-Presented below is selected information related to Flanagan Company at Decembe
ID: 2431781 • Letter: 4
Question
4-Presented below is selected information related to Flanagan Company at December 31, 2012. Flanagan reports financial information monthly.(15 marks) Equipment $10,000 Cash 8,000 Accounts Receivable 9,000 Salaries and Wages Expense 7,000 Notes Payable 16,500 Owner's Drawings 5,000 Utilities Expense $ 4,000 Service Revenue 36,000 Rent Expenses 11,000 Accounts Payable 2,000 Instructions: (a)Determine the total assets of Flanagan Company at December 31, 2012. (Marking: 1 mark for each step x5 5 marks) (b)Determine the net income that Flanagan Company reported for December 2012. (Marking: 1 mark for each step x 5 # 5 marks) (c)Determine the owner's equity of Flanagan Company at December 31, 2012. (Marking: 1 mark for each stepx 5 #5 marks)Explanation / Answer
1) Solution: Total assets: $27,000,
Working:
Total assets= Cash $8,000 + Accounts Receivable $9,000 + Equipment $10,000
2) Solution: Net income: $14,000
Working:
Revenues
Service revenue
36,000
Expenses
Rent expense
11,000
Salaries and wage expense
7,000
Utilities expense
4,000
Total expenses
22,000
Net income
14,000
?
3) Solution: Ending owner’s equity: $8,500
Working:
Total assets
27,000
Minus: Liabilities
Notes payable
16,500
Accounts payable
2,000
18,500
Owner's equity
8,500
Revenues
Service revenue
36,000
Expenses
Rent expense
11,000
Salaries and wage expense
7,000
Utilities expense
4,000
Total expenses
22,000
Net income
14,000
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