On December 31, 2022, Sheridan Company prepared an income statement and balance sheet, but failed to take into account three adjustments. The balance sheet showed total assets $159,000, total liabilities $74,200, and stockholders’ equity $84,800. The incorrect income statement showed net income of $74,200. The data for the three adjustments were: 1. Salaries and wages amounting to $10,600 for the last 2 days in December were not paid and not recorded. The next payroll will be in January. 2. Rent payments of $8,480 were received for two months in advance on December 1. The entire amount was recorded as Unearned Rent Revenue when received. 3. Depreciation expense for 2022 is $9,540. Complete the following table to correct the financial statement amounts shown. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Item Net Income Total Assets Total Liabilities Stockholders’ Equity Incorrect balances $74,200 $159,000 $74,200 $84,800 Effects of: Salaries and Wages enter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount Rent Revenue enter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount Depreciation enter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount Correct balances

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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Question

On December 31, 2022, Sheridan Company prepared an income statement and balance sheet, but failed to take into account three adjustments. The balance sheet showed total assets $159,000, total liabilities $74,200, and stockholders’ equity $84,800. The incorrect income statement showed net income of $74,200.

The data for the three adjustments were:

1.		Salaries and wages amounting to $10,600 for the last 2 days in December were not paid and not recorded. The next payroll will be in January.
2.		Rent payments of $8,480 were received for two months in advance on December 1. The entire amount was recorded as Unearned Rent Revenue when received.
3.		Depreciation expense for 2022 is $9,540.

Complete the following table to correct the financial statement amounts shown. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Correct balances
Item	Net Income	Total Assets	Total Liabilities	Stockholders’ Equity
Incorrect balances	$74,200	$159,000	$74,200	$84,800
Effects of:
Salaries and Wages	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
Rent Revenue	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
Depreciation	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount

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