Salaries Expense Accounts Payable | 21,500 Dec. 31 Cash Common Stock Dec. 31 5,800 20,000 Dec. 31 Dec. 31 17,000 Depreciation Expense-Equipment Accounts Receivable Dec. 31 12,000 Unearned Revenue Dividends 4,000 Dec. 31 Dec. 31 28,000 Prepaid Rent 2,800 Salaries Payable Rent Expense Service Revenue Jan, 2 59,500 Dec. 31 Office Supplies Utilities Expense Dec. 31 800 Jan. 2 2,600 Supplies Expense Equipment Jan. 2 36,000| Accumulated Depreciation-Equipment
One year ago, Tyler Stasney founded Swift Classified Ads. Stasney remembers that you took an accounting course while in college and comes to you for advice. He wishes to know how much net income his business earned during the past year in order to decide whether to keep the company going. His accounting records consist of the T-accounts from his ledger, which were prepared by an accountant who moved to another city. The ledger at December 31 follows. The accounts have not been adjusted.
Stasney indicates that at year-end, customers owe the business $1,600 for accrued service revenue. These revenues have not been recorded. During the year, Swift Classified Ads collected $4,000 service revenue in advance from customers, but the business earned only $900 of that amount. Rent expense for the year was $2,400, and the business used up $1,700 of the supplies. Swift determines that
Help Swift Classified Ads compute its net income for the year. Advise Stasney whether to continue operating Swift Classified Ads.
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