The Wildcat Magazine prepares annual financial statements. The December 31, 2016

Question

The Wildcat Magazine prepares annual financial statements. The December 31, 2016 and December 31, 2017, trial balances contained the following account information: Dec 31, 2016 Dec 31, 2017 Supplies $2,500 $3,300 Interest Receivable 0 800 Salaries Payable 8,000 6,500 Unearned Revenue 45,000 56,300 The following information is also known: a) The 2017 income statement reports $12,000 in supplies expense. b) Wildcat Magazine loaned money to a supplier on November 1st, 2017 at a 10% annual interest rate. The loan must be repaid with interest on March 1st, 2018. c) $112,000 was paid to employees for wages during 2017. d) Wildcat received $178,200 from customers for annual subscriptions during 2017. Required: 1. What was the cost of supplies purchased during 2017? 2. How much money was loaned to the supplier on November 1 st, 2017? 3. What was the total amount of salaries expense reported on the 2017 income statement? 4. How much subscription revenue was recognized (recorded) in 2017?

Explanation / Answer

2,500 + x – 3,300 = 12,000

X = 12,800

X*10%*2/12 = 800

= 48,000

8000 +x -6,500 = 112,000

X = 110,500

45000+178,200 – 56,300 = 166,900

1. Cost of supplies purchased

2,500 + x – 3,300 = 12,000

X = 12,800

1. Money loaned to the supplier on nov 1 ,2107

X*10%*2/12 = 800

= 48,000

1. Amount of salaries expense reported

8000 +x -6,500 = 112,000

X = 110,500

1. Subscription revenue

45000+178,200 – 56,300 = 166,900

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