Reference no: EM132973390
Question - You are the loan manager for Scotiabank. A customer, Brown's Tutoring Services, has applied for a loan to expand its business. In support of the loan application, the tutoring company has supplied an income statement for the last six months that shows a net income of $25 000.
The following items were not considered in the preparation of this income statement:
Salaries of $3 500 are owed to employees for the last month but have not been paid or recorded as an expense.
Interest charges of $2 100 are owed to CIBC.
Renovations to the tutoring office costing $20 500 have been made, but the invoice has not yet been received.
a) What effect does the ignorance of the above three items have on the income statement and the company's net income?
b) What should be the correct net income? Show your work.
c) Which accounting standard has not been followed, and why?
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