The Blue Chip Co. prepared the following income statement for December 31, 2011 but neglected to make the necessary adjusting entries.

Required: Prepare a corrected income statement after considering the following:
(1.) The company had purchased a truck for $4,800 on January 1, 2011 which was expected to last 5 years. It was originally debited to the account "Truck" and credited to cash.
(2.) Salaries of $2,400 were owed to employees but not yet recorded.
(3.) The company owed $640 in accrued interest which was to be paid early in January 2012.
(4.) In November 2011, the company had received $3,600 of advance payments which were originally recorded as Unearned Revenue. One-third of this was earned in December, 2011.

Question

The Blue Chip Co. prepared the following income statement for December 31, 2011 but neglected to make the necessary adjusting entries.

Required: Prepare a corrected income statement after considering the following:
(1.) The company had purchased a truck for $4,800 on January 1, 2011 which was expected to last 5 years. It was originally debited to the account "Truck" and credited to cash.
(2.) Salaries of $2,400 were owed to employees but not yet recorded.
(3.) The company owed $640 in accrued interest which was to be paid early in January 2012.
(4.) In November 2011, the company had received $3,600 of advance payments which were originally recorded as Unearned Revenue. One-third of this was earned in December, 2011.

Quizplus · Accepted Answer

The Answer of The Blue Chip Co. prepared the following income statement for December 31, 2011 but neglected to make the necessary adjusting entries.

Required: Prepare a corrected income statement after considering the following:
(1.) The company had purchased a truck for $4,800 on January 1, 2011 which was expected to last 5 years. It was originally debited to the account "Truck" and credited to cash.
(2.) Salaries of $2,400 were owed to employees but not yet recorded.
(3.) The company owed $640 in accrued interest which was to be paid early in January 2012.
(4.) In November 2011, the company had received $3,600 of advance payments which were originally recorded as Unearned Revenue. One-third of this was earned in December, 2011.