Ltd.’s trial balance at September 30, 2021, was as follows:

The company’s bookkeeper had failed to record adjusting entries for the following:

1. The company’s employees had earned salaries of $22,100 during the last six working days in September. These will be paid in the first week of October.

2. Interest on the bank loan was not accrued for the month. The loan bears interest at 6%.

3. No depreciation expense was recorded for the equipment for September. The equipment is expected to have an estimated six-year useful life.

4. The company satisfied its performance obligations related to $18,000 of the deferred revenue. Instructions

a. What would Suski’s net income have been without the missing adjustments? What would it have been if the necessary adjusting entries were made?

b. Quantify the amount by which Suski’s working capital would have changed as a result of making the necessary adjusting entries.

c. Determine Suski’s current ratio before and after the necessary adjusting entries were made. Would it have been overstated or understated if the necessary adjusting entries were not made?

d. Were Suski’s total liabilities understated or overstated before the necessary adjusting entries were made? By what amount?

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Cash Accounts receivable Prepaid insurance Equipment Accumulated depreciation-equipment Deferred revenue Accounts payable Bank loan payable Common shares Retained earnings Dividends declared Service revenue Supplies expense Depreciation expense Salaries expense Utilities expense Interest expense Insurance expense Income tax expense $ 152,000 310,000 36,000 1,440,000 55,000 38,000 165,000 660,000 7,000 17,000 66,000 29,000 $ 600,000 53,000 110,000 478,000 25,000 440,000 1,269,000