During a maternity leave of the full-time bookkeeper, a temporary employee was involved in the following transactions.

1. A payment by cheque for $480 to a repair shop for fixing the truck was debited to the Vehicles account and a credit to Cash.
2. A deposit for a collection on account of $1,000 was debited to Cash and credited to Service Revenue.
3. A cheque for $440 to pay for advertising expense was recorded as a Debit to Rent Expense and a credit to Cash.
4. An invoice to a customer recorded for services rendered in the amount $550 was debited to Service Revenue and credited to Accounts Receivable.
5. A payment of interest on a note payable in the amount of $40 was debited to Notes Payable and credited to Cash. No amount had been accrued for this interest.
6. A payment to a supplier, for an earlier purchase on account of $260, was recorded as a debit to Accounts Payable for $26 and a credit to Cash for $26.

Indicate the impact of each error on the balance sheet and income statement by stating whether assets, liabilities, owner’s equity, revenues, expenses, and profit are understated, overstated, or if there is no effect.

	Assets	Liabilities	Owner's Equity	Revenue	Expenses	Profit
1	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect
2	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect
3	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect
4	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect
5	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect
6	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect	Understated Overstated No Effect

Answer rating: 100% (QA)

Assets Liabilities Owners Equity Revenue Expenses Profit 1 Overstated No effect ... View the full answer