Question

Big Blue Rental Corp. provides rental agent services to apartment building owners. Big Blue Rental Corp's preliminary income statement for August 2019 and its August 31, 2019. preliminary balance sheet did not reflect the following: a. Rental commissions of $670 had been earned in August but had not yet been received from or billed to building owners. b. When supplies are purchased their cost is recorded as an asset. As supplies are used a record of those used is kept. The record sheet shows that $530 of supplies were used in August. c. Interest on the note payable is to be paid on May 31 and November 30. Interest for August has not been accrued--that is, it has not yet been recorded. (The Interest Payable of $90 on the balance sheet is the amount of the accrued liability at July 31) The Interest rate on this note is 10%. d. Wages of $430 for the last week of August have not been recorded e. The Rent Expense of $1,530 represents rent for August September, and October, which was paid early in August 1. Interest of $450 has been earned on notes receivable but has not yet been received g. Late in August, the board of directors met and declared a cash dividend of $4,500, payable September 10. Once declared the dividend is a liability of the corporation until it is paid. es Required: a. Using the columns provided on the income statement and balance sheet for Big Blue Rental Corp. make the appropriate adjustments/corrections to the statements, and enter the correct amount in the Final column (Hint Use the five questions of transaction analysis.) Final BIG BLUE RENTAL CORP. Income Statement August 2019 Adjustments / Corrections Preliminary Debit Credit $ 9,800 3,400 13,200 $ 0$ 0 $ 1,530 2.550 0 on on Commissions revenue Interest revenue Total revenues Rent expense Wages expense Supplies expense Interest expense Total expenses Net income 0 $ 0 $ $ 4,080 $ 9,120 0 $ 0

Answer 1

BIG BLUE RENTAL CORP.
Income Statement
August 2019
	Preliminary	Debit	Credit	Final
Commissions revenue	9800		670	10470
Interest revenue	3400		450	3850
Total revenue	13200	0	1120	14320
Rent expense	1530		1020	510
Wages expense	2550	430		2980
Supplies expense		530		530
Interest expense (5400*10%*1/12)		45		45
Total expenses	4080	1005	1020	4065
Net Income	9120	-1005	100	10255
BIG BLUE RENTAL CORP.
Balance Sheet
August 31, 2019
	Preliminary	Debit	Credit	Final
Assets
Cash	1650			1650
Notes receivable	28000			28000
Commissions receivable		670		670
Interest receivable		450		450
Prepaid rent (1530*2/3)		1020		1020
Supplies	3000		530	2470
Total assets	32650	2140	530	34260
Liabilities and Stockholders' equity				0
Accounts payable	60			60
Notes payable	5400			5400
Interest payable	90		45	135
Wages payable			430	430
Dividend payable			4500	4500
Total liabilities	5550	0	4975	10525
Paid-in-capital	5400			5400
Retained earnigs:				0
Balance August 1	12580			12580
Net income	9120			10255
Dividends		4500		-4500
Balance August 31	21700			18335
Total Stockholders' equity	27100	4500	0	62940
Total Liabilities and Stockholders' equity	32650	4500	4975	34260