Answer to Question #305605 in Accounting for alex

Question

Key Insurance Agency was organized on October 1, 2020. Assume that the accounts are closed and financial statements prepared each month. The company occupies rented office space but owns office equipment estimated to have a useful life of 10 years from date of acquisition, October 1. The trial balance for Key Insurance Agency at December 31 is shown below.

Cash $22,565

Accounts Receivables 7.050

Office Equipment 9,600

Accumulated Depreciation: Office Equipment 160

Accounts Payable 2,260

Income Taxes Payable 4,965

Capital Stock 20,000

Retained Earnings 7,450

Dividends 2,500

Commissions Earned 31,080

Advertising Expense 2,400

Salaries Expense 18,000

Rent Expense 3,800

Totals $65,915 $65,915

calculate taxable income fore the month of December using 40% corporate rate

prepare income statement , statement of retained earing for the month ended December 31,2020

Answer 1

Depreciation is not reflected in liabilities, but reduces the cost of fixed assets.

Debit main production credit depreciation - depreciation charge - 160

balance will be as follows