- Q 20 Quinn Spellman Formed Spellman Tutoring Inc Sti And It Has Since Become A Popular Provider Of Academic Tutoring 1 (365.03 KiB) Viewed 52 times
Q 20: Quinn Spellman formed Spellman Tutoring, Inc (STI) and it has since become a popular provider of academic tutoring within the local community. You are working with the
company to prepare the 20X1 financial statements and Quinn provides you with the below 12/31/20X1 account balances, all of which are normal. As indicted by the
question mark, certain balances have been intentionally omitted. A/C # Account Description Cash 100 105 110 115 120 125 130 200 205 210 215 220 225 Accounts receivable Prepaid insurance expense Teaching supplies Copy Machine Accumulated depreciation Land Accounts Payable- SSC Interest Payable Tutoring Advance Pay Wages Payable Utilities Payable Notes payable Balance $? 12,000 9,000 38,000 16,000 13,320 25,000 7,000 0 0 0 0 40,000 A/C # 300 305 310 400 500 505 510 515 520 525 530 535 540 Account Description Common stock Retained earnings Dividends Tutoring Revenue Advertising Expense Depreciation expense Equipment Rental Expense Insurance Expense Interest expense Miscellaneous Expense Supplies Expense Utilities expense Wages expense Balance $30,000 20,000 20,000 215,000 40,000 0 9,000 7,000 0 ? 0 11,000 105,000 For purposes of this
question, assume STI (Spellman Tutoring, Inc) has net income for the twelve months ended 12/31/20X1 totaling $43,000. Please consider the following 3 transactions and select the answer choice below representing the updated 12/31/20X1 net income after considering these 3 items.
For purposes of this
question, assume STI (Spellman Tutoring, Inc) has net income for the twelve months ended 12/31/20X1 totaling $43,000. Please consider the following 3 transactions and select the answer choice below representing the updated 12/31/20X1 net income after considering these 3 items. (i) (ii) (iii) On October 1, 20X1, STI borrowed $40,000 from the local bank. The 9-month loan charges 6% and all interest and principal on maturity on is due July 1, 20X2. During 20X1 STI prepaid insurance policies in the amount of $9,000. As of 12/31/20X1, one-third of the coverage has happened, and two-third relates to 20X2. During 20X1 STI started offering discounts to those clients that pay tutoring fees in advance. Many regular clients took advantage of this offering and during 20X1, STI collected $8,000 of advance payments from customers for future tutoring sessions. At the time of the cash collection, all $8,000 was recorded to account #400, and no additional entries were made. Quinn lets you know that as of 12/31/20X1 $5,600 of the prepaid tutoring sessions have occurred with the remainder scheduled to occur in 20X2. A. $37,000 B. $44,800 C. $45,000 D. $36,800 E. None of the answer choices provided are correct.