Question one: Based on the unadjusted trail balance for Nour company on December 31, 2022, total revenues were $83,000 and total expenses were $70,500 Additional information: a-On January 1,2022, the company purchased equipment for $50,000 cash. The equipment has an estimated useful life of five years and expects to sell the equipment at the end of its life for $5,000 cash. b- The prepaid insurance account had a 6,000debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the company's insurance policies shows that $650 of unexpired coverage remains. c- The supplies account had a $280 debit balance at the beginning of the year. And $2,680 of supplies were purchased during the year. The December 31 physical count showed $330 of supplier available. d- One-third of the work related to $15,000 of cash received in advance was performed in this period e-As of December 31,2022, $2,213 of interest expenses has accrued on a note payable the full interest payment of 6,640 on the note is due on May 20,2023 - On Dec. 12,2022, a customer agreed to pay $2,700 on Jan. 10.2023 for the next year's future service over the next 30 days. Required: 1) Use the above information to prepare the adjusting entries for the year ended December 31,2022 2) Calculate the correct net income (net loss) for Nour company for the year ended December 31, 2022, after adjustment.
Question one: Based on the unadjusted trail balance for Nour company on December 31, 2022, total revenues were $83,000 and total expenses were $70,500 Additional information: a-On January 1,2022, the company purchased equipment for $50,000 cash. The equipment has an estimated useful life of five years and expects to sell the equipment at the end of its life for $5,000 cash. b- The prepaid insurance account had a 6,000debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the company's insurance policies shows that $650 of unexpired coverage remains. c- The supplies account had a $280 debit balance at the beginning of the year. And $2,680 of supplies were purchased during the year. The December 31 physical count showed $330 of supplier available. d- One-third of the work related to $15,000 of cash received in advance was performed in this period e-As of December 31,2022, $2,213 of interest expenses has accrued on a note payable the full interest payment of 6,640 on the note is due on May 20,2023 - On Dec. 12,2022, a customer agreed to pay $2,700 on Jan. 10.2023 for the next year's future service over the next 30 days. Required: 1) Use the above information to prepare the adjusting entries for the year ended December 31,2022 2) Calculate the correct net income (net loss) for Nour company for the year ended December 31, 2022, after adjustment.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Question one:
Based on the unadjusted trail balance for Nour company on December 31, 2022, total revenues
were $83,000 and total expenses were $70,500
Additional information:
a-On January 1,2022, the company purchased equipment for $50,000 cash. The equipment has an
estimated useful life of five years and expects to sell the equipment at the end of its life for $5,000
cash.
b- The prepaid insurance account had a 6,000debit balance at December 31 before adjusting for
the costs of any expired coverage. An analysis of the company's insurance policies shows that
$650 of unexpired coverage remains.
c- The supplies account had a $280 debit balance at the beginning of the year. And $2,680 of
supplies were purchased during the year. The December 31 physical count showed $330 of
supplier available.
d- One-third of the work related to $15,000 of cash received in advance was performed in this
period
e-As of December 31,2022, $2,213 of interest expenses has accrued on a note payable the full
interest payment of 6,640 on the note is due on May 20,2023
- On Dec. 12,2022, a customer agreed to pay $2,700 on Jan. 10.2023 for the next year's future
service over the next 30 days.
Required:
1) Use the above information to prepare the adjusting entries for the year ended December
31,2022
2) Calculate the correct net income (net loss) for Nour company for the year ended December 31,
2022, after adjustment.
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