Question

On May 1 of Year 1 M&M Enterprises paid $1,920 cash for an insurance policy that would provide protection for a one year term. The company’s fiscal closing date is December 31. Based on this information, the amount of  prepaid insurance appearing on the Year 1 Balance Sheet would be $___________

RSPACE Co earns $13,249 of revenue on account and in $6,167 cash revenue transactions in Year 1. Cash collections of receivables amount to $5,849 in Year 1 with the remainder being collected in Year 2. Based on this information alone the company’s financial statements would show Total Revenue in Year 1 of $________________

During 2018, the following events occurred for DAn consultants

1. Dan provided $51,710 of consulting services to its clients but no cash has been collected.
2. Dan collected $26,563 cash from customers in partial settlement of its accounts receivable.
3. Dan paid the instructor $11,395 cash for teaching training courses (salary expense).
4. Dan paid $3,452 for supplies. Half of the supplies were used in 2018.
5. Dan paid $3,281 in dividends.

After recording all these transactions, Clouseau’s net income will be $

Answer 1

Ans 1 $1,920 Amount paid for insurance premium Period May 1 to April 30 Expense for the year [May 1 to Dec 31] $1,280 ($1920/12x8] The amount of prepaid insurance appearing on the Year 1 Balance Sheet would be $640 [$1920-$1280] Ans 2 Total Revenue revenue on account cash revenue Total Revenue in Year 1 of $13,249 $6,167 $19,416 Ans 3 Dan Consultants Income Statement For the year ended 31st Dec 2018 Revenue from Consulting Service $51,710 Less: Salary Expense Supplies Expense ($3452/2] Net Income -$11,395 -$1,726 $38,589