**Effects of Errors on Financial Statements**The accountant for Healthy Life Consulting, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($26,250) and (b) accrued wages ($8,470).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 ($26,250) 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. Owner’s equity at July 31 would be| | |This table is designed to help assess financial reporting errors and their impact on various financial statement components. Each item allows for quantifying discrepancies in financial figures resulting from omitted accounting entries. **Error (b):** The adjusting entry for accrued wages ($8,470) 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. Owner’s equity at July 31 would be | $ | $ |

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The accountant for Healthy Life Consulting, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($26,250) and (b) accrued wages ($8,470). 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.

The accountant for Healthy Life Consulting, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($26,250) and (b) accrued wages ($8,470). 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.

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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