On December 31, 2022, Waters Company prepared an income statement and balance sheet, but failed to take into account three adjusting entries. The balance sheet showed total assets $150,000, total liabilities $70,000, and stockholders’ equity $80,000. The incorrect income statement showed net income of $70,000. 

The data for the three adjusting entries were: 

1. Salaries and wages amounting to $10,000 for the last 2 days in December were not paid and not recorded. The next payroll will be in January. 

2. Rent payments of $8,000 was received for two months in advance on December 1. The entire amount was credited to Unearned Rent Revenue when paid. 

3. Depreciation expense for 2022 is $9,000. 

Instructions 

Complete the following table to correct the financial statement amounts shown (indicate deductions with parentheses).

Transcribed Image Text:

Net Stockholders' Item Income Total Assets Total Liabilities Equity Incorrect balances $70,000 $150,000 $70,000 $80,000 Effects of: Salaries and Wages Rent Revenue Depreciation Correct balances |||