[tryingtogetthis]

My net income is 1100 over what it should be and I can't figure it out. Help would be greatly appreciated.

Here is the premise:
Original Trial balance:
Debits
Cash 9500
Accounts Receivable 14000
Equipment 45000
Insurance Expense 1800
Salaries Expense 30000
Supplies Expense 3700
Advertising Expense 1900
Rent Expense 1500
Utilities Expense 1750
Totals 109,100

Credits
Notes Payable 20000
Accounts Payable 9000
Jill Salzer, Capital 22000
Graphic Revenue 52100
Consulting Revenue 6000
Totals 109,100

1. The 3700 balance in Supplies Expense represents supplies purchased in January. At June 30, 1300 of supplies was on hand.
2. The note payable was issued on Feb. 1. It is a 12% 6 month note.
3. The balance in Insurance expense is the premium on a one-year policy, dated March 1, 2005.
4. Consulting fees are credited to revenue when received. At June 30, consulting fees of 1100 are unearned.
5. graphic revenue earned but unrecorded at June 30 totals 2000.
6. Depreciation is 3000 per year.


Here are my Journal entries:
1.Supplies Dr 2400
Supplies Expense Cr 2400

2. Interest Expense Dr 1000
Interest Payable Cr 1000

3. Prepaid Insurance Dr 1200
Insurance Expense Cr 1200

4. Consulting Revenue Dr 1100
Unearned Consulting Revenue Cr 1100

5. Accounts Receivable Dr 2000
Graphic Revenue Cr 2000

6. Depreciation Expense Dr 1500
Accumulated Depreciation Cr. 1500

So then, my trial balance is correct at 113600, which is what the book says it should be.
Trial Balances

Debits:
Cash 9500
Accounts receivable 16000
Equipment 45000
Insurance expense 600
Salaries expense 30000
Advertising expense 1900
Rent expense 1500
Utilities expense 1700
Interest expense 1000
Depreciation expense 1500
Prepaid isurance 1200
Supplies 2400

Credits:
Notes payable 20000
Accounts payable 9000
Interest payable 1000
Jill Salzer, Capital 22000
Graphic revenue 54100
Consulting revenue 4900
Accumulated depreciation 1500
Unearned consulting revenue 1100

Everything is adding up until I get to my income statement. Net income should be 18,400, but I get 19500.

Revenues
Graphic revenue 54100
Consulting revenue 4900
Total revenues 59000

Expenses
Insurance exp 600
Salaries exp 30000
Supplies exp 1300
Advertising exp 1900
Rent exp 1500
Utilities exp 1700
Interest exp 1000
Depreciation exp 1500
Total expenses 39500

Net income 19,500

I have looked at this until I'm cross eyed and can't find my mistake. I'm sure it is to do with the unearned revenues, but I don't know what to do. Thank you thank you thank you in advance for

[CaptainForest]

FIRST PROBLEM:
Your ORIGINAL trial balance does NOT balance.

When I add your debits, I get 109,150


Your adjusting Entries.

I agree with 1-5.

But for number 6….

6. Depreciation is 3000 per year.

6. Depreciation Expense Dr 1500
Accumulated Depreciation Cr. 1500

Why did you only record depreciation expense at 1,500 and not 3,000?

Adjusted Trial Balance:
Debits
Cash 9,500
Accounts Receivable 14,000 + 2,000 = 16,000
Prepaid Insurance 1,200
Office Supplies 2,400
Equipment 45,000
Insurance Expense 1,800 – 1,200 = 600
Salaries Expense 30,000
Supplies Expense 3,700 – 2,400 = 1,300
Advertising Expense 1,900
Rent Expense 1,500
Utilities Expense 1,750
Interest Expense 1,000
Depreciation Expense 3,000

Totals 115,150

Credits
Notes Payable 20,000
Accounts Payable 9,000
Interest Payable 1,000
Jill Salzer, Capital 22,000
Graphic Revenue 52,100 +2,000 = 54,100
Consulting Revenue 6,000 – 1,100 = 4,900
Unearned Consulting Revenue 1100
Accumulated Depreciation 3,000

Totals 115,100


I am going to stop right now until you get back with the correct original trial balance before adjustments.

[tryingtogetthis]

Thank-you for your response!

Sorry, I gave incomplete information. The business was formed Jan 1 and this is a 6 months trial balance (June 30). That is why depreciation is 1500 instead of 3000.

Utilities expense was originally 1700, not 1750 as I incorrectly stated.

Let me try this again. The trial balance should be 113,600.
Debits
Cash 9500
Accounts Receivable 16000
Equipment 45000
Insurance Expense 600
Salaries Expense 30000
Supplies Expense 1300
Advertising Expense 1900
Rent Expense 1500
Utilities Expense 1700
Interest Expense 1000
Depreciation Expense 1500
Prepaid Insurance 1200
Supplies 2400

Credits
Notes Payable 20000
Accounts Payable 9000
Interest Payable 1000
Jill Salzer, Capital 22000
Graphic Revenue 54100
Consulting Revenue 4900
Accumulated Depreciation 1500
Unearned Consulting Rev 1100

[CaptainForest]

Your adjusting Entries.

I agree with 1-5.

But for number 6….

6. Depreciation is 3000 per year.

6. Depreciation Expense Dr 1500
Accumulated Depreciation Cr. 1500

Why did you only record depreciation expense at 1,500 and not 3,000?

Adjusted Trial Balance:
Debits
Cash 9,500
Accounts Receivable 14,000 + 2,000 = 16,000
Prepaid Insurance 1,200
Office Supplies 2,400
Equipment 45,000
Insurance Expense 1,800 – 1,200 = 600
Salaries Expense 30,000
Supplies Expense 3,700 – 2,400 = 1,300
Advertising Expense 1,900
Rent Expense 1,500
Utilities Expense 1,700
Interest Expense 1,000
Depreciation Expense 3,000

Totals 115,100

Credits
Notes Payable 20,000
Accounts Payable 9,000
Interest Payable 1,000
Jill Salzer, Capital 22,000
Graphic Revenue 52,100 +2,000 = 54,100
Consulting Revenue 6,000 – 1,100 = 4,900
Unearned Consulting Revenue 1100
Accumulated Depreciation 3,000

Totals 115,100



Addition Notes/Comments to the Solution:

I get an adjusted trial balance of 115,100 whereas you get 113,600. The reason for the difference is that I am using 3,000 in depreciation expense, whereas you are only using 1,500

As for the income statement as per my numbers…

Graphic Revenue 54,100
Consulting Revenue 4,900
TOTAL REVENUES 59,000

Insurance Expense 600
Salaries Expense 30,000
Supplies Expense 1,300
Advertising Expense 1,900
Rent Expense 1,500
Utilities Expense 1,700
Interest Expense 1,000
Depreciation Expense 3,000
TOTAL EXPENSES 41,000

NET INCOME 18,000

I am getting a Net Income of 18K, your alternative would be 19,500.

Not sure how it is suppose to be 18,400, perhaps I overlooked something. I will re-examine this in a bit.

[bernisscott12]

How do we know whether a trial balance is incomplete?