Rupinder Delivery Services made the following errors in the year-end account adjustments on June 30:
a. Did not record $1,800 gasoline charges on the credit card for the week of June 26.
b. Did not adjust $900 of delivery services provided to a client for the second half of June. The invoice for the service was sent out on July 3rd.
c. Recorded a full year of depreciation, based on a delivery truck cost of $27,000 and salvage value of $2,000, with a useful life of 5 years. The delivery truck was purchased on April 1.
d. Did not adjust for unexpired insurance. A one-year insurance premium of $2,400 was paid on February 1 and the coverage started immediately. The transaction was recorded in the Insurance Expense account.
Requirements
1. What is the impact that each item has had on net income, and 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 described above, prepare the appropriate adjusting entry to reflect the correct account balance.