An accountant made the following adjustments at December 31, the end of the accounting period: a. Prepaid

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An accountant made the following adjustments at December 31, the end of the accounting period:
a. Prepaid insurance, beginning, $500. Payments for insurance during the period, $1,500. Prepaid insurance, ending, $1,000.
b. Interest revenue accrued, $1,100.
c. Unearned service revenue, beginning, $1,200. Unearned service revenue, ending, $400.
d. Depreciation, $4,900.
e. Employees salaries owed for three days of a five-day work week; weekly payroll, $14,000.
f. Income before income tax, $22,000. Income tax rate is 25%.

Requirements
1. Journalize the adjusting entries.
2. Suppose the adjustments were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.

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Financial accounting

ISBN: 978-0136108863

8th Edition

Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas

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