An accountant made the following adjustments at December 31, the end of the accounting period: a. Prepaid
Question:
An accountant made the following adjustments at December 31, the end of the accounting period:
a. Prepaid insurance, beginning, $300. Payments for insurance during the period, $2,900. Prepaid insurance, ending, $600.
b. Interest revenue accrued, $2,400.
c. Unearned service revenue, beginning, $1,600. Unearned service revenue, ending, $300.
d. Depreciation, $5,500.
e. Employees' salaries owed for two days of a five-day work week; weekly payroll, $13,000.
f. Income before income tax, $20,000. Income tax rate is 35%.
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.
Step by Step Answer:
Financial Accounting
ISBN: 978-0134127620
11th edition
Authors: Walter Harrison, Charles Horngren, William Thomas, Wendy Tietz