The trial balance for Parker Company is as follows:
-If the trial balance showed a balance of $14,000 in the Mike Parker,Withdrawals account and a balance of $30,000 in the Wages Expense account,what would be the amount of Advertising Fees Earned for the period?
A)$106,000
B)$86,000
C)$116,000
D)$56,000

Question

The trial balance for Parker Company is as follows:  
-If the trial balance showed a balance of $14,000 in the Mike Parker,Withdrawals account and a balance of $30,000 in the Wages Expense account,what would be the amount of Advertising Fees Earned for the period?
A)$106,000 
B)$86,000 
C)$116,000 
D)$56,000

Quizplus · Accepted Answer

Since there is a balance in the Mike Parker,Withdrawals account, it means that this account is a nominal account and should be closed at the end of the period. Therefore, the balance cannot be used to calculate the net income for the period.
The advertising fees earned account is also a nominal account that contributes to the net income for the period. To calculate the amount of Advertising Fees Earned, we need to subtract the total expenses from the total revenues.
Total Revenues = $310,000 (calculated from the trial balance)
Total Expenses = Wages Expense ($30,000) + Mike Parker,Withdrawals ($14,000) = $44,000
Therefore, Advertising Fees Earned = $310,000 - $44,000 = $266,000
Hence, the correct answer is B.

The Trial Balance for Parker Company Is as Follows