Question

During 2019, Ocean Consulting had the following transactions with it clients (customers):

• On February 1, 2019, the company received cash of $10,000 from clients in payment of their account balances as of December 31, 2018.
• On November 1, 2019, the company received $4,000 cash as payments in advance for services to be performed in 2020.
• The company received a total of $26,000 in cash for services that were performed during 2019.
• The company sent bills totaling $8,000 to clients for services performed during 2019; this amount was unpaid as December 31, 2019.

What is the amount of Service Revenue that will be reported on the income statement for the year 2019?

2. First Corporation had Retained Earnings at the end of December 31, 2018 of $458,000. During 2019, the company had net income of $178,000 and declared dividends of $20,800. The amount of Retained Earnings reported on the balance sheet as of December 31, 2019 will be:

3. Maya Co. had $12,000 of supplies at the end of October. During November, the company bought $4,000 of supplies. At the end of November, the company had $2,000 of supplies remaining. Which of the following statements is not correct?

Multiple Choice

• An asset should be debited for $2,000 in November.

• Supplies should be reported at $2,000 on the balance sheet.

• An expense should be debited for $14,000 in November.

• During November, the company used $14,000 of supplies.

Answer 1

1
Cash received for services performed during 2019	26000
Bills to clients for services performed during 2019	8000
Service Revenue on the income statement for the year 2019	34000
2
Retained Earnings, December 31, 2018	458000
Add: Net income	178000
Less: Dividends	-20800
Retained Earnings, December 31, 2019	615200

3

Supplies expense = 12000+4000-2000 = $14000

Supplies expense should be debited for $14,000 , the company used $14,000 of supplies.

An asset should be debited for $2,000 in November is not correct

Option A should be selected