Question

On December 31, 2019, Krug Company prepared adjusting entries that included the following items:

Depreciation expense: $32,000.

Accrued sales revenue: $30,000.

Accrued expenses: $11,000.

Used insurance: $4,000; the insurance was initially recorded as prepaid.

Rent revenue earned: $2,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue.

If Krug Company reported pretax income of $240,000 prior to the adjusting entries, how much is Krug's pretax income after the adjusting entries?

Multiple Choice

• $225,000.

• $229,000.

• $255,000.

• $227,000.

Answer 1

pretax income after the adjusting entries	225,000.00
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Statement showing Computations
Particulars	Amount
pretax income prior to the adjusting entries	240,000.00
Depreciation expense:	(32,000.00)
Accrued sales revenue	30,000.00
Accrued expenses	(11,000.00)
Used insurance	(4,000.00)
Rent revenue earned	2,000.00
pretax income after the adjusting entries	225,000.00