Mint Cleaning Inc. prepared the following unadjusted trial balance at the end of its second year of operations ending December 31, 2013. To simplify this exercise, the amounts given are in thousands of dollars.

Other data not yet recorded at December 31, 2013:
a. Insurance expired during 2013, $5.
b. Depreciation expense for 2013, $4.
c. Wages payable, $7.
d. Income tax expense, $9.
Required:
1. Prepare the adjusting journal entries for 2013.
2. Using T-accounts, determine the adjusted balances in each account and prepare an adjusted trial balance as of December 31, 2013.
3. By what amount would net income have been understated or overstated had the adjusting journal entries not been recorded?

Transcribed Image Text:

Account Titles Cash Accounts Receivable Prepaid Insurance Debit Credit 5 38 6 80 Accumulated Depreciation Accounts Payable Contributed Capital 76 Sales Revenue Administrative Expenses Wages Expense 80 26 10 Totals