Patel Instruments, Inc. made the following errors in the year-end account adjustments on December 31:
a. Did not record $1,200 salary owed to employees for 4 days of work.
b. Did not adjust $1,600 of revenue earned from the Unearned Revenue account for the second half of December.
c. Recorded a full year of depreciation, based on an equipment cost of $26,000 and salvage value of $2,000, with a useful life of 4 years. The equipment was purchased on October 1.
d. Did not adjust $600 of unused office supplies that was originally recorded in the Office Supplies Expense account.
Requirements
1. What is the impact that each item has had on net income and on the asset, liability, and shareholders’ equity accounts? Show understatements by “U,” overstatements by “O,” and no effect by “NE,” and identify their amounts.
2. Based on each item (a) to (d) described above, prepare the appropriate adjusting entry for each item to reflect the correct account balance.