Answered: Effects of Omitting Adjustments For…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Effects of Omitting Adjustments

For the year ending April 30, Safeguard Medical Services Co. mistakenly omitted adjusting entries for (1) $1,700 of supplies that were used, (2) unearned revenue of $8,000 that was earned, and (3) insurance of $10,900 that expired. Indicate the effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended April 30.

(a) Revenues		$fill in the blank 2
(b) Expenses		$fill in the blank 4
(c) Net income		$fill in the blank 6

Expert Solution

Step 1: Introduce to income statement

Income statement :— It is one of the financial statement that shows profitability, total revenue, and total expenses of company during the period. Net income is the difference between total revenue and total expenses.

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