Supplies expense 350 utilities expense 400 insurance

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Supplies Expense 350 Utilities Expense 400 Insurance Expense 1,500 Depreciation expense (display cases) (d) 300 Depreciation expense (light fixture) 111 Interest Expense 500 Shipping cost 200 Installation fee 500 Depreciation Expense 1,000 Total Expenses 22574 Net income before tax 1186 Tax expense (e) 415 net income 771
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(a)Inventory: we using perpetual LIFO for our cost of goods sold expense and inventory. (b)Sale revenue recognition: we recognition if an entity sells its product but gives the buyer the right to return the product, revenue from the sales transaction shall be recognized at time of sale. (c)Services revenue: ours of extended warranty or product maintenance contracts have an obligation to the buyer to perform services throughout the period of the contract and, therefore, revenue shall be recognized in income over the period in which our employees is obligated to perform. (d)Equipment and property: are stated at cost. Depreciation for equipment and property is using the straight -line method over it’s useful life of the respective assets, which is generally four months and fifteen days for both light fixture and display cases. (e)Reflect tax effect at an assumed marginal tax rate of 35 %.
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