On December 31, 2008, Gomez Company prepared an income statement and balance sheet and failed to...
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On December 31, 2008, Gomez Company prepared an income statement and balance sheet and failed to take into account three adjusting entries. The incorrect income statement showed net income of $40,000. The balance sheet showed total assets, $120,000; total liabilities, $45,000; and owner's equity, $75,000. The data for the three adjusting entries were: (1) Depreciation of $9,000 was not recorded on equipment. (2) Wages amounting to $8,000 for the last two days in December were not paid and not recorded. The next payroll will be in January. (3) Rent of $14,000 was paid for two months in advance on December 1. The entire amount was debited to Rent Expense when paid. Instructions Complete the following tabulation to correct the financial statement amounts shown (indicate deductions with parentheses): Item Incorrect balances Effects of: Depreciation Wages Rent Correct Balances Net Income $ 40,000 Total Assets $120,000 Total Liabilities $ 45,000 Owner's Equity $ 75,000 On December 31, 2008, Gomez Company prepared an income statement and balance sheet and failed to take into account three adjusting entries. The incorrect income statement showed net income of $40,000. The balance sheet showed total assets, $120,000; total liabilities, $45,000; and owner's equity, $75,000. The data for the three adjusting entries were: (1) Depreciation of $9,000 was not recorded on equipment. (2) Wages amounting to $8,000 for the last two days in December were not paid and not recorded. The next payroll will be in January. (3) Rent of $14,000 was paid for two months in advance on December 1. The entire amount was debited to Rent Expense when paid. Instructions Complete the following tabulation to correct the financial statement amounts shown (indicate deductions with parentheses): Item Incorrect balances Effects of: Depreciation Wages Rent Correct Balances Net Income $ 40,000 Total Assets $120,000 Total Liabilities $ 45,000 Owner's Equity $ 75,000
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Related Book For
Equity Asset Valuation
ISBN: 978-0470571439
2nd Edition
Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen
Posted Date:
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