Hentzel Landscaping commenced its business on January 1, 2014.
1. During the first year of its operations, Hentzel purchased supplies in the amount of $12,000 (debited to Supplies inventory), and of this amount, $3,000 were unused as of December 31, 2014.
2. On March 1, 2014, Hentzel received $18,000 for landscaping services to be rendered for 18 months (beginning July 1, 2014). This amount was credited to Unearned landscaping revenue.
3. The company’s gasoline bill for $2,500 for the month of December 2014 was not received until January 15, 2015.
4. The company had borrowed $50,000 from HomeTown Financing on April 1, 2014, at a 12% interest rate per annum. The principal, along with all the interest, is due on April 1, 2015.
5. On January 1, 2014, the company purchased 10 lawnmowers at $3,000 per unit. They are expected to last for three years with no salvage value.
On December 31, 2014, Hentzel did not record any adjusting entries with respect to these transactions.

Using the following table format, show the effect of the omission of each year-end adjusting entry on the following. (Indicate both the amount and the direction of the effect.) Use OS for overstated, US for understated, and NE for noeffect.

  • CreatedSeptember 10, 2014
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