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![Chapter 3 HW E3-7 Determining Accounting Equation Effects and Net Income [LO 3-2, LO 3-3] The following transactions occurred during a recent year a Pald wages of $1,450 for the current period (example). b. Barrowed $7.250 cash from local bank using a short-term note c. Purchased $2.900 of equipment on credit d. Eamed $580 of sales revenue, collected cash e. Received $1,160 of utilities services, on credit f. Earned S2.450 of service venue, on credit. Paid $435 cash on account to a supplier incurred $100 of travel expenses; paid cash. L Eamed $580 of service revenue, colected half in cash, with balance on credt. Colected $160 cash from austomers on account k Inourred $420 of advertising costs paid half in cash, with balance on cred Required 1. For each of the transactions, complete the labie bellow, indicating the account, amount, and direction of the effect ( for increase and- for decrease) of each transaction under the accrual basis Include revenues and expenses as subcategores of stockholders equity, as shown for the irst transaction which is provided as an example. Also, denermine the companys pretiminary net income. (Enter angy decreases to account balances with a minus sign 3 Answer is not complete. 11450) a Cash 1450) Experse 072501-Note Payacle(sh0HK) 。17250 b. Cash 200 Accounts Payable Saies Reveriue 580 0 2.45四 O 11000 d. Cash Accounts Payable Service Revenve t. |Accounts Recevabie 9 Cash hCash ·く10001 e Experse Service Revana580 Cash Cash O 110 0 O (4200 Cash 2. Determine the companys prelimnary net ncome O Answer is complete but not entirely correct. s 1380 0](https://media.cheggcdn.com/media%2F36b%2F36bce0fd-080f-43e4-8c2e-634e27a86e66%2Fimage)
Determining Accounting Equation Effects and Net Income [LO 3-2, LO 3-3] The following transactions occurred during a recent year: a. Paid wages of $1,450 for the current period (example). b. Barrowed $7.250 cash from local bank using a short-term note. c. Purchased $2.900 of equipment on credit. d. Earned $580 of sales revenue, collected cash. e. Received $1,160 of utilities services, on credit f. Earned $2,450 of service venue, on credit. g. Paid $435 cash on account to a supplier. h. incurred $100 of travel expenses: paid cash. j. Earned $580 of service revenue, collected half in cash, with balance on credit. j. Collected $160 cash from customers on account. k Incurred $420 of advertising costs paid half in cash, with balance on credit Required For each of the transactions, complete the labia bellow, indicating the account, amount, and direction of the effect (+ for increase and – for decrease) of each transaction under the accrual basis Include revenues and expenses as subcategories of stockholders’ equity, as shown for the first transaction which is provided as an example. Also, determine the company’s preliminary net income. (Enter any decreases to account balances with a minus sign.) Determine the company’s preliminary net income
Expert Answer
Solution :- Calculation of the preliminary net income in the given question :-
Total revenues = Sales revenue + Service revenue (earned on credit).
= 580 + 2450.
= $ 3030.
Total expenses = Travel expense + Advertising expense + Wages expense.
= 100 + 420 + 1450
= $ 1970.
Preliminary net income = Total revenues – Total expenses.
= 3030 – 1970
= $ 1060.
Conclusion :- Preliminary net income = $ 1060.
