Problem 3-1

N. Klein & Company had the following transactions in June. Using the matching
concept, decide which of these transactions represented expenses for June.

a. Received orders for goods with prices totaling $25,000.00; Goods to be

delivered in July.
b. Paid Office staff $9,750.00 for work performed in June.
c. Products in Inventory costing $1,725 were found to be obsolete.
d. Sold goods with a cost of $25,000.00 in June.
e. Paid $750.00 for radio and advertising in June.
f. Purchased additional Inventory for $27,000.00.

Answer:
Transactions b, c, d, e

Problem 3-7
QED Electronics Company had the following transactions during April while
conducting its television and stereo repair business.

1. A new repair truck was purchased for $19,000.00

2. Parts with a cost of $1,600.00 were received and used during April.
3. Service Revenue for the month was $33,400.00, but only $20,500.00 was
cash sales. Typically, only 95 percent of sales on account are realized.
4. Interest expense on loans outstanding was $880.00.
5. Wage cost for the month totaled $10,000; however $1,400.00 of this had not
yet been paid to employees.
6. Parts inventory from the beginning of the month was depleted by $2,100.00.
7. Utility bills totaling $1,500.00 were paid. $700.00 of this was associated with
March’s operations.
8. Depreciation expense was $ 2,700.00.
9. Selling Expenses were $1,900.00
10.A provision for income taxes was established at $2,800.00 of which
$2,600.00 had been paid to the federal government.
11.Administrative and miscellaneous expenses were recorded at $4,700.00

Required: Prepare a detailed April Income Statement.

QED Electronic Company

 Income Statement
For the Month Ended April, 20XX

33,400.
Total Revenue 00

Less: Expenses
3,700.
Supplies Expense 00
10,000.
Salaries Expense 00
800.
Utility Expense 00
1,900.
Selling Expense 00
Administrative and Miscellaneous 4,700.
Expense 00
2,700.
Depreciation Expense 00
880.
Interest Expense 00
24,680.
Total Expenses 00

8,720.
Income Before Taxes 00

2,800.
Provision for Income Taxes 00

5,920.
Net Income 00