Before Month-End Adjustments Are Made, the February 28 Trial Balance $\bullet$

question 173

Essay

Before month-end adjustments are made, the February 28 trial balance of Alice's Adventures contains revenue of $7,000 and expenses of $3,900. Adjustments are necessary for the following items:
$\bullet$ Depreciation for February is $1,500.
$\bullet$ Revenue earned but not yet billed is $2,300.
$\bullet$ Accrued interest expense is $700.
$\bullet$ Revenue collected in advance that is now earned is $3,500.
$\bullet$ Portion of prepaid insurance expired during February is $600.
Instructions
Calculate the correct net income for Alice's Income Statement for February.

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Definitions:

Outstanding Checks

Checks that have been written and recorded in the paying entity's accounting system but have not yet been cashed or cleared by the bank.

Purchase Requisitions

Purchase requisitions are formal requests made within an organization to purchase goods or services, typically before a purchase order is created and allocated the necessary budget.

Purpose

The purpose behind why something is done, created, or exists.

Petty Cash Fund

A small amount of cash on hand used for minor or incidental expenses within a business.