At the end of June, the first month of operations, the following selected data were taken from the financial statements of Both Cato, an attorney:

Net income for June? ? ? ? ? ? ? ??? ?? $ 80,000

Total assets at June 30? ? ? ? ? ??? ? ? ? ? ??? ? ? ? ? ??500,000

Total liabilities at June 30? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?200,000

Total stockholders? equity at June 30? ? ? ? ? ? ?300,000

In preparing the financial statements, adjustments for the following data were overlooked:

a. Supplies used during June, $1,500.

b. Unbilled fees earned at June 30, $18,000.

c. Depreciation of equipment for June, $3,000.

d. Accrued wages at June 30, $1,200.

Instructions

1. Journalize the entries to record the omitted adjustments

2. Determine the correct amount of net income for June and the total assets, liabilities, and stockholders? equity at June 30. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. Adjustment (a) Is presented as an example.?

Transcribed Image Text:

Total Stockhelders Equity Total Total Liabilities Net Income Assets $200,000 Reported amounts Corrections Adjustment (a) Adjustment (b) Adjustment (c) Adjustment (d) Corrected amounts $500,000 SB0,000 $300,000 -1,500 -1,500 -1,500