Question

An accountant made the following adjustments at December 31, the end of the accounting period:
a. Prepaid insurance, beginning, $800. Payments for insurance during the period, $2,400. Prepaid insurance, ending, $1,600.
b. Interest revenue accrued, $1,000.
c. Unearned service revenue, beginning, $1,500. Unearned service revenue, ending, $400.
d. Depreciation, $4,600.
e. Employees salaries owed for three days of a five-day work week; weekly payroll, $16,000.
f. Income before income tax, $21,000. Income tax rate is 25%.

Requirements
1. Journalize the adjusting entries.
2. Suppose the adjustments were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.



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  • CreatedDecember 10, 2012
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