Calvin’s Cleaning has employed you to investigate whether any accrual entries are needed in the business. On completion of your investigation on 30 June, you have discovered that the following items need attention:

1. Unearned cleaning services revenue now earned, $3200.

2. Depreciation not recorded, $12 000.

3. Employee salaries owed but not recorded, $6400.

4. Prepaid insurance expired, $1200.

5. Interest revenue accrued but not recorded, $1600.

Required

A. Prepare the adjusting entries for items 1 to 5 at 30 June, the end of the accounting period.

B. Suppose the adjusting entries in requirement A were not made. Calculate the total overstatement or understatement of profit as a result of the omission of these adjustments.