1 answer

Exercise 3-44 (Algorithmic) Revenue Expense and Recognition Carrico Advertising Inc, performs advertising services for several Fortune...

Question:

Exercise 3-44 (Algorithmic) Revenue Expense and Recognition Carrico Advertising Inc, performs advertising services for severa
Exercise 3-44 (Algorithmic) Revenue Expense and Recognition Carrico Advertising Inc, performs advertising services for several Fortune 500 companies. The following information describes Carrico's activities during 2019. a. At the beginning of 2019, customers owed Carrico $45,800 for advertising services performed during 2018. During 2019, Carrico performed an additional $691,100 of advertising services on account. Carrico collected $708,700 cash from customers during 2019. b. At the beginning of 2019, Carrico had $13,210 of supplies on hand for which it owed suppliers $8,150. During 2019, Carrico purchased an additional $14,600 of supplies on account Carrico also paid $19,300 cash owed to suppliers for goods previously purchased on credit. Carrico had $2,230 of supplies on hand at the end of 2019. C. Carrico's 2019 operating and interest expenses were $437,600 and $135,500, respectively. Required: 1. Calculate Carrico's 2019 income before taxes. $ 97,320 X 2. Calculate the ending balance of accounts receivable, the supplies used, and the ending balance of accounts payable. Enter all amounts as positive values Ending balance of accounts receivable 33,500 Supplies used 24,780 X Ending balance of accounts payable 3,450 ✓

Answers

1. Income before income taxes: $92,420

Service revenue 691100
Less:
Operating expense 437600
Interest expense 135500
Supplies expense 25580 598680
Income before income taxes $ 92420

2. Ending balance of accounts receivable = $45800 + $691100 - $708700 = $28200

Supplies used = $13210 + $14600 - $2230 = $25580

.

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