The accountant for Astaire Medical Co., a medical services consulting firm, mistakenly omitted adjusting entries for (a)
Question:
The accountant for Astaire Medical Co., a medical services consulting firm, mistakenly omitted adjusting entries for
(a) Unearned revenue earned during the year ($23,250)
(b) Accrued wages ($4,000).
Indicate the effect of each error, considered individually, on the income statement for the current year ended August 31. Also indicate the effect of each error on the August 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect theitem.
Error (a) Error (b) Over- stated Under- stated OverU stated Under stated 1. Revenue for the year would be 2. Ex 3. Net income for the year would be 4. Assets at August 31 would be 5. Liabilities at August 31 would be 6. Stockholders' equity at August 31 would be penses for the year would be
Step by Step Answer:
Error a Error b Over Under Over Under stated stated stated stated 1 Revenu...View the full answer
Corporate Financial Accounting
ISBN: 978-1133952411
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
Related Video
Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. It can be thought of as a \"prepayment\" for goods or services that a person or company is expected to supply to the purchaser at a later date. As a result of this prepayment, the seller has a liability equal to the revenue earned until the good or service is delivered. This liability is noted under current liabilities, as it is expected to be settled within a year.
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