The Following Amounts Were Taken from the Accounting Records at December

question 101

Essay

The following amounts were taken from the accounting records at December 31:
$\begin{array}{lrl}\text { Service revenue } & \$ 600,000 & \text { Salaries expense }&\$200,000 \\\text { Dividends paid } & 50,000 & \text { Rent expense }&86,000 \\\text { Buildings } & 110,000 & \text { Land } &100,000\\\text { Accounts payable } & 40,000 & \text { Accounts receivable } &28,000\\\text { Common shares } & 60,000 & \text { Retained earnings, Jan. 1 }&400,000 \\\text { Utilities expense } & 19,000 & \text { Notes payable } &30,000\\\text { Income tax pavable } & 4,000 & \text { Income tax expense }&110,000\end{array}$
A) Calculate net income for the year.

B) Calculate retained earnings at the end of the year.

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Definitions:

Unsecured Credit

refers to credit extended without any collateral backing, based solely on the borrower's creditworthiness and promise to repay.

Foreclosure

The legal process by which a lender takes possession of a property used as collateral for a loan due to failure of the borrower to meet the repayment terms.

Deficiency

The shortfall amount between a debt owed and the proceeds from the sale of assets pledged to secure the debt.

Surplus

The amount of an asset or resource that exceeds the portion that is utilized.