Below is an example and then the actual assignment. We use the journal entries given and then use this obscure method to calculate net income, etc. Can someone explain how this works? Im not familiar with this at all.

Supplies used $25 Nothing 10 NE NE NE NE NE NE NE Revenue earned on account 50 Required: Determine the net effect of these errors on the following items. Indicate the dollar amount of the error and the direction of the error. (Example: $17 overstated, or $12 understated, or NO ERROR). Net Income 25 U Prepaid Rent Cash Rent paid in advance $10 10 10 U& 10 0 25 U Nothing Accounts Receivable 50 50 U NE 50 U 50 U NE 50 U 50 U Total Assets Total Liabilities Retained Earnings (eb) NE Revenue 50 25 U Revenue earned account $50 Rev NI A L RE Exp 25 U EQ 25 U Answer: Net Effect 50 U 25 U 25 U NE 25 U This is what they did: This is what should have been done: Debit Credit Rev Exp NI A L RE EQ Nothing Section Three (4 points) The Mace Company failed to record these 3 Journal Entries: Cash dividend declared $50 Expiration of Prepaid Insurance $30 Purchase of Supplies on Credit $17 Required: Determine the net effect of these errors on the following items. Indicate the dollar amount of the error and the direction of the error. (Example: $17 overstated, or $12 understated, or NO ERROR). Net Income NE Total Assets Total Liabilities Retained Earnings (eb) Nothing Nothing ap Rev Exp NI A L RE EQ Answer: Net Effect