Prepare journal entries to record the transactions in 2018 and 2019. a. Using only the information provided (ignore other operating expenses), p statements for 2018 and 2019. p. Was 2018 really as profitable as indicated by its income statement? c. Was 2019 quite as bad as indicated by its income statement?
Prepare journal entries to record the transactions in 2018 and 2019. a. Using only the information provided (ignore other operating expenses), p statements for 2018 and 2019. p. Was 2018 really as profitable as indicated by its income statement? c. Was 2019 quite as bad as indicated by its income statement?
Chapter4: Income Tax Withholding
Section: Chapter Questions
Problem 5QD
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Question
Transcribed Image Text:Trevorson Electronics is a small company privately owned by Jon Trevorson, an electrician who installs
wiring in new homes. Because the company's financial statements are prepared only for tax purposes, Jon
uses the direct write-off method. During 2018, its first year of operations, Trevorson Electronics sold
$28,400 of services on account. The company collected $25,200 of these receivables during the year, and
Jon believed that the remaining $3,200 was fully collectible. In 2019, Jon discovered that none of the
$3,200 would be collected, so he wrote off the entire amount. To make matters worse, Jon sold only $5,100
of services during the year.
Required:
1. Prepare journal entries to record the transactions in 2018 and 2019.
2-a. Using only the information provided (ignore other operating expenses), prepare comparative income
statements for 2018 and 2019.
2-b. Was 2018 really as profitable as indicated by its income statement?
2-c. Was 2019 quite as bad as indicated by its income statement?
Complete this question by entering your answers in the tabs below.
Reg 1
Reg 2A
Reg 2B
Reg 20
Was 2019 quite as bad as indicated by its income statement?
Was 2019 quite as bad as indicated by its income statement?
< Req 2B
Req 20 >
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