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Determine the proper amount of net income

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A While preparing the ?nancial statements of Amazing Consulting Company (ACC) for the year ended December 31, 2018, you discover the following:

Point a. An insurance policy covering three years was purchased on June 1, 2018, for 7,200. The entire amount was debited to insurance expense and no adjusting entry was recorded for this item.

Point b. During November 2018, the company received a $2,000 cash advance from a customer for services to be rendered in 2019. The $2,000 advance was credited to sales revenue.

Point c. There were no supplies listed in the balance sheet under assets. However, you discover that supplies costing $600 were on hand at December 31.

Point d. ACC lent $20,000 to XYZ Company on September 30, 2018. Principal and interest at 12% will be received on September 30, 2019. No accrual was recorded for the interest.

Point e. Net income reported in the 2018 income statement is $45,000 before re?ecting adjusting entries related to any of the above items.

Required

Question 1. Prepare the adjusting entries (if any) related to parts a to d.

Question 2. Determine the proper amount of net income for 2018.

Reference no: EM132479832

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