When adjusting entries were made at the end of the year, the accountant for Parker Company did not make the following adjustments. Required: Identify the effect on the financial statements of the adjusting entries that were omitted. a. Wages of $2,900 had been earned by employees but were unpaid. This error will understate expenses and understate liabilities. b. $3,750 of performance obligations had been satisfied but no cash was uncollected nor any revenue recorded. c. $2,400 performance obligations had been satisfied. The customer had prepaid for this service and the amount was originally recorded in the Unearned Sales Revenue account. This error will understate revenues and overstate liabilities. d. $1,200 of insurance coverage had expired. Insurance had been initially recorded in the Prepaid Insurance account.
When
Required:
Identify the effect on the financial statements of the adjusting entries that were omitted.
a. Wages of $2,900 had been earned by employees but were unpaid.
This error will understate expenses and understate liabilities.
b. $3,750 of performance obligations had been satisfied but no cash was uncollected nor any revenue recorded.
c. $2,400 performance obligations had been satisfied. The customer had prepaid for this service and the amount was originally recorded in the Unearned Sales Revenue account.
This error will understate revenues and overstate liabilities.
d. $1,200 of insurance coverage had expired. Insurance had been initially recorded in the Prepaid Insurance account.
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