An accountant made following adjustments at December 31, the end of the accounting period: a. Prepaid insurance,
Question:
An accountant made following adjustments at December 31, the end of the accounting period:
a. Prepaid insurance, beginning, $600. Payments for insurer during the period, $2,400. Prepaid insurance, ending,
b. Interest revenue accrued, $2,600.
c. Unearned service revenue, beginning. "$1,700. Unearned service revenue ending, $5,8OO.
d. Depreciation, SS. 300.
e. Employees' salaries owed for two days of a five—day work week; weekly payroll. $20,000.
f. Income before income tax. $21,000. Income tax rate is 35%.
Requirements:
1. Journalize the adjusting entries.
2. Suppose the adjustments were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas