Answer to Question #236616 in Accounting for Another you

Question

1. During August 2021, Blue's Repair Shop had the following transactions:
a. Paid 7,500 for rent
b. Provided services for 15,000 in cash
c. Paid 1,500 for internet subscription
d. Purchased repair tools for cash, 3,000
e. Provided 5,500 worth of services on account
f. Paid 4,000 salaries of workers
-The account recorded an earning of 15,000 and costs incurred at 16,000, thereby resulting to a net loss of Php 1,000.
-Did the accountant determine the elements of the SCI correctly? Why or why not?

Answer 1

The accountant did not determine the SCI elements correctly. As per the workings below Blue Repairs Shop earnings were 20,500 and expenses of 11,500 resulting in a net income of 9,000

Revenue

Cash Sales 15,000

Credit Sales 5,500

Total Revenue 20,500

Expenses

Rent 7,500

Internet Subscription 1,500

Salaries 4,000

Total Expenses 11,500

Net Income 9,000