Question

LM Company's December 31, 2020 unadjusted trial
balance reported the following accounts:

Accounts Payable ............  $37,000
Accounts Receivable .........  $61,000
Accumulated Depreciation ....  $33,000
Cash ........................  $20,000
Common Stock ................  $54,000
Cost of Goods Sold ..........  $47,000
Equipment ...................  $71,000
Income Tax Expense ..........  $12,000
Interest Expense ............  $16,000
Inventory ...................  $70,000
Investment Revenue ..........  $56,000
Mortgage Payable ............  $40,000
Prepaid Insurance ...........  $26,000
Retained Earnings ...........  $42,000 (at January 1, 2020)
Sales Revenue ...............  $95,000
Trademark ...................  $22,000
Unearned Revenue ............  $19,000
Wage Expense ................  $31,000

LM Company has not yet recorded an adjusting entry
to record $7,000 of depreciation on the equipment.

1）Calculate the amount of net income that LM Company
would report in its 2020 income statement after the
appropriate adjusting entry is made to record the
depreciation.

2）

Calculate the amount of total assets that LM Company
would report in its December 31, 2020 balance sheet
after the appropriate adjusting entry is made to
record the depreciation.

Answer 1

Income Statement
Sales revenue		95000
Less: Cost of goods sold	47000
Gross Profit		48000
Expnse
Wages expense		31000
Depreciation expense	7000
Total Operating expense	38,000
Operating income		10,000
Add: Investment revenue	56000
Less: Interest expense	-16000
Before tax Income		50000
Less: Income tax		12000
After tax income		38000
Answer is $ 38,000
Q2.
Total assets
Cash			20000
Accounts receivable		61000
Inventory			70000
Prepaid insurance		26000
Total Current assets			177000
Equipment		71000
Less: Acc. Dep (33000+7000)	40000	31000
Trademark			22,000
Total assets			2,30,000