signment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false Error (a) The adjusting entry for unearned revenue earned during the year ($21,820) was omitted Overstated Understated 1. Revenue for the year would be 2. Expenses for the year would be 3. Net income for the year would be 4. Assets at July 31 would be 5. Liabilities at July 31 would be 6. Stockholders' equity at July 31 would be Error (b) The adjusting entry for accrued wages ($6,770) was omitted. Overstated Understated 1. Revenue for the year would be 2. Expenses for the year would be 3. Net income for the year would be 4. Assets at July 31 would be 5. Liabilities at July 31 would be 6. Stockholders' equity at July 31 would be %24 %24 %24 %24 %24 %24

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($21,820) and (b) accrued wages ($6,770).

Indicate the effect of each error, considered individually, on the income statement for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet.

Enter all amounts as positive numbers. Enter "0" in those spaces where there is no overstatement or no understatement.

Error (a) The adjusting entry for unearned revenue earned during the year ($21,820) was omitted.

geNOWv2 | Online teachin x
b Search results for "he adjusting e X
eAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false
Error (a) The adjusting entry for unearned revenue earned during the year ($21,820) was omitted.
Overstated
Understated
1. Revenue for the year would be
2. Expenses for the year would be
3. Net income for the year would be
2$
4. Assets at July 31 would be
$4
5. Liabilities at July 31 would be
%24
6. Stockholders' equity at July 31 would be
Error (b) The adjusting entry for accrued wages ($6,770) was omitted.
Overstated
Understated
1. Revenue for the year would be
2. Expenses for the year would be
3. Net income for the year would be
4. Assets at July 31 would be
5. Liabilities at July 31 would be
6. Stockholders' equity at July 31 would be
$
Check My Work
Previous
Next
All work saved.
Email Instructor
Save and Exit
Submit Assignment for Grading
11:20 PM
2/19/2021
Transcribed Image Text:geNOWv2 | Online teachin x b Search results for "he adjusting e X eAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false Error (a) The adjusting entry for unearned revenue earned during the year ($21,820) was omitted. Overstated Understated 1. Revenue for the year would be 2. Expenses for the year would be 3. Net income for the year would be 2$ 4. Assets at July 31 would be $4 5. Liabilities at July 31 would be %24 6. Stockholders' equity at July 31 would be Error (b) The adjusting entry for accrued wages ($6,770) was omitted. Overstated Understated 1. Revenue for the year would be 2. Expenses for the year would be 3. Net income for the year would be 4. Assets at July 31 would be 5. Liabilities at July 31 would be 6. Stockholders' equity at July 31 would be $ Check My Work Previous Next All work saved. Email Instructor Save and Exit Submit Assignment for Grading 11:20 PM 2/19/2021
Expert Solution
Step 1 Question pertains to accounting concepts and adjustment entries impact

The question pertains to the application of accounting concepts and adjustment entries impact due to non-application of those concepts. The major concept which is being discussed in this question is the "accrual" concept.  

As per the accrual concept, an entity should recognize income and expense in the year in which the same has been incurred irrespective of the fact that the transaction has occurred in some other year. 

trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Accounting Changes and Error Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education