Mayer Corporation, a Private Company Reporting Under ASPE Has the Following

question 107

Essay

Mayer corporation, a private company reporting under ASPE has the following information available with respect to the company's operations until December 31, 2016:
1. Collected $345,000 cash for service revenue earned.
2. Paid $125,000 salaries expense, $56,000 rent expense, and $5,000 insurance expense.
3. Purchased a new vehicle for $35,000 cash on January 1, 2016. This vehicle will be depreciated over 5 years with no salvage value.
4. Accrued $16,000 for income taxes during 2016.
5. On December 31. 2016 the following adjustments were completed:
Service revenue earned but not yet collected in cash $22,500
Accrued Interest expense $4,500
Accrued Salaries expense $7,200
Mayer has a 20% income tax rate.
Instructions
Prepare an income statement and record the adjustment to income taxes.

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Definitions:

Annexation

The act of incorporating a land area into another entity, such as a country or city, often involving a change in political control.

Mexican Territory

Historical lands under the jurisdiction of Mexico, including areas that are now part of the United States following territorial changes.

Mammy

A historical stereotype of a black woman, often depicted as a devoted and submissive servant to white families, particularly in the southern United States.

Plantation Owner

An individual who owns extensive estate used primarily for agricultural production, historically associated with the use of slave labor.