[The following information applies to the questions displayed below.] Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $13. At the start of January 2021, VGC’s income statement accounts had zero balances and its balance sheet account balances were as follows: Cash $ 1,600,000 Accounts Receivable 174,000 Supplies 15,100 Equipment 930,000 Buildings 510,000 Land 2,050,000 Accounts Payable 113,000 Deferred Revenue 74,000 Notes Payable (due 2025) 94,000 Common Stock 2,500,000 Retained Earnings 2,498,100 In addition to the above accounts, VGC’s chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense. The following transactions occurred during the January month: Received $57,750 cash from customers on 1/1 for subscriptions that had already been earned and charged on account in 2020. Purchased 10 new computer servers for $41,500 on 1/2; paid $11,500 cash and signed a three-year note for the remainder owed. Paid $14,300 for an Internet advertisement that ran today on 1/3. On January 4, purchased and received $5,300 of supplies on account. Received $150,000 cash on 1/5 from customers for service revenue earned but not previously recorded in January. On January 6, paid $5,300 cash for supplies purchased on January 4. On January 7, sold 19,900 subscriptions at $13 each for services provided during January. Half was collected in cash and half was sold on account. Paid $380,000 in wages to employees on 1/30 for work done in January. On January 31, received an electric and gas utility bill for $6,260 for January utility services. The bill will be paid in February. Prepare an Income Statement for the month ended January 31, 2021, using unadjusted balances from part 4.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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[The following information applies to the questions displayed below.]

Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $13. At the start of January 2021, VGC’s income statement accounts had zero balances and its balance sheet account balances were as follows:

Cash	$ 1,600,000
Accounts Receivable	174,000
Supplies	15,100
Equipment	930,000
Buildings	510,000
Land	2,050,000
Accounts Payable	113,000
Deferred Revenue	74,000
Notes Payable (due 2025)	94,000
Common Stock	2,500,000
Retained Earnings	2,498,100

In addition to the above accounts, VGC’s chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense. The following transactions occurred during the January month:

Received $57,750 cash from customers on 1/1 for subscriptions that had already been earned and charged on account in 2020.
Purchased 10 new computer servers for $41,500 on 1/2; paid $11,500 cash and signed a three-year note for the remainder owed.
Paid $14,300 for an Internet advertisement that ran today on 1/3.
On January 4, purchased and received $5,300 of supplies on account.
Received $150,000 cash on 1/5 from customers for service revenue earned but not previously recorded in January.
On January 6, paid $5,300 cash for supplies purchased on January 4.
On January 7, sold 19,900 subscriptions at $13 each for services provided during January. Half was collected in cash and half was sold on account.
Paid $380,000 in wages to employees on 1/30 for work done in January.
On January 31, received an electric and gas utility bill for $6,260 for January utility services. The bill will be paid in February.

Prepare an Income Statement for the month ended January 31, 2021, using unadjusted balances from part 4.

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