Concept explainers
Adjustments and errors
At the end of May, the first month of operations, the following selected data were taken from the financial statements of Julie Mortenson, Attorney at Law, PC.:
In preparing the financial statements, adjustments for the following data were overlooked:
a. Unbilled fees earned at May 31, $9.700
h.
c. Accrued wages at May 31. $1,150
d. Supplies used during May, $975
Instructions
Determine the correct amount of net income for May and the total assets, liabilities, and
Trending nowThis is a popular solution!
Chapter 3 Solutions
Survey of Accounting (Accounting I)
Additional Business Textbook Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Fundamentals Of Financial Accounting
Financial Accounting, Student Value Edition (5th Edition)
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Intermediate Accounting
Fundamentals Of Cost Accounting (6th Edition)
- Reviewing payroll records indicates that one-fifth of employee salaries that are due to be paid on the first payday in January, totaling $15,000, are actually for hours worked in December. There was no previous balance in the Salaries Payable account at that time. Based on the information provided, make the December 31 adjusting journal entry to bring the balances to correct.arrow_forwardPrepare adjustment entries of followingmCompany A at January 31st. 1. Office supplies having original cost $4,320 were unused till the end of the period. Office supplies having original cost of $22,800 are shown on unadjusted trial balance. 2. Prepaid rent of $36,000 was paid for the months January, February and March. 3. The equipment costing $80,000 has useful life of 5 years and its estimated salvage value is $14,000. Depreciation is provided using the straight line depreciation method. 4. The interest rate on $20,000 note payable is 9%. Accrue the interest for one month. 5. $3,000 worth of service has been provided to the customer who paid advance amount of $4,000.arrow_forwardThe accounts receivable clerk for Kirchhoff Industries prepared the following partially completed aging of receivables schedule as of the end of business on August 31: G A D Days Past Due Not 1 2 Past Over 3 Customer Balance Due 1-30 31-60 61-90 90 4 Academy Industries Inc. 5 Ascent Company 3,000 4,500 3,000 4,500 21 Zoot Company 22 Subtotals 5,000 1,050,000 600,000 220,000 115,000 5,000 85,000 30,000arrow_forward
- Year-end adjusting journal entries Prepare budgetary and proprietary journal entries to record the following year-end adjustments: Note: If a journal entry is not required, select No entry as your answers and leave the Debit and Credit answers blank (zero). 1. An accrual of $60,000 was made for salaries earned the last week of September, to be paid in October. Budgetary funds were available for this purpose.arrow_forwardReviewing payroll records indicates that employee salaries that are due to be paid on January 3 include $3,575 in wages for the last week of December. There was no previous balance in the Salaries Payable account at that time. Based on the information provided, make the December 31 adjusting journal entry to bring the balances to correct.arrow_forwardThe following accounts appear in the ledger of Celso and Company as of June 30, the end of this fiscal year. The data needed for the adjustments on June 30 are as follows: ab.Merchandise inventory, June 30, 54,600. c.Insurance expired for the year, 475. d.Depreciation for the year, 4,380. e.Accrued wages on June 30, 1,492. f.Supplies on hand at the end of the year, 100. Required 1. Prepare a work sheet for the fiscal year ended June 30. Ignore this step if using CLGL. 2. Prepare an income statement. 3. Prepare a statement of owners equity. No additional investments were made during the year. 4. Prepare a balance sheet. 5. Journalize the adjusting entries. 6. Journalize the closing entries. 7. Journalize the reversing entry as of July 1, for the wages that were accrued in the June adjusting entry. Check Figure Net income, 14,066arrow_forward
- Error: Analysis and Correction On July 1 of Year 8, a full year's insurance premium of $2,400, covering the period July 1 of Year 8 to June 30 of Year 9, was paid and debited to insurance expense. Assume the following: • The company has a calendar fiscal year. • January 1 of Year 8, retained earnings balance is $20,000. • Year 8 reported net income (assuming the error is not discovered) is $22,800. Year 9 net income (assuming the error is not discovered) is $30,000. • Year 10 net income is $40,000. Ignore taxes. Required a. List the effects of the error on affected accounts and on net income in Year 8 and Year 9. Assume no adjusting entry is made on December 31 of Year 8. • Note: Indicate an understatement by using a negative sign (-) with the amount. Indicate no change by entering a zero (0). Accounts are over (under) stated as follows: Year 8 Insurance expense $ Ending prepaid insurance Net income Ending retained earnings Ref. b. b. Prepare the entry to record the error if discovered…arrow_forwardErnie Upshaw is the supervising manager of Sleep Tight Bedding. At the end of the year, the company’s accounting manager provides Ernie with the following information, before any adjustment. Accounts receivable $ 518,000 Estimated percent uncollectible 9% Allowance for uncollectible accounts $ 21,800 (debit) Operating income $ 338,000 In the previous year, Sleep Tight Bedding reported operating income (after adjustment) of $293,000. Ernie knows that it’s important to report an upward trend in earnings. This is important not only for Ernie’s compensation and employment, but also for the company’s stock price. If investors see a decline in earnings, the stock price could drop significantly, and Ernie owns a large amount of the company’s stock. This has caused Ernie many sleepless nights. Required:1. Record the adjusting entry for uncollectible accounts using the accounting manager’s estimate of 9% of accounts receivable. 2-a. After the adjusting entry is recorded…arrow_forwardA company determines supplies expense for each year by keeping a record of all supplies purchased during the year, and counting the amount of supplies on hand at the end of the year to determine the amount of supplies used during the year. On December 31, Year 1, the employee in charge of counting the supplies accidentally double‐counted $400 worth of supplies. Based on this error, what will be wrong with the reported amount of “Supplies” asset on the December 31, Year 1 balance sheet? What will be wrong with the “Supplies Expense” amount shown on the income statement for the year ended December 31, Year 1? For both of these numbers, tell me whether the number will be overstated or understated, and by how much.arrow_forward
- Rosie Dry Cleaning was started on January 1, Year 1. It experienced the following events during its first two years of operation. Events Affecting Year 1 Provided $33,520 of cleaning services on account. Collected $26,816 cash from accounts receivable. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account. Events Affecting Year 2 Wrote off a $251 account receivable that was determined to be uncollectible. Provided $39,118 of cleaning services on account. Collected $34,619 cash from accounts receivable. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account. Required Record the events for Year 1 and Year 2 (including closing entries for Year 1) in T-accounts. Determine the following amounts: (1) Net income for Year 1. (2) Net cash flow from operating activities for Year 1. (3) Balance of accounts…arrow_forwardReviewing payroll records indicates that employee salaries that are due to be paid on January 3 include $3,575 in wages for the last week of December. There was no previous balance in the Salaries Payable account at that time. Based on the information provided, make the December 31 adjusting journal entry to bring the balances to correct. BIU A + v ... Paragraph Add a File Record Audio !!!arrow_forwardAt the end of the year, Metro, Inc. has an unadjusted credit balance in the Manufacturing Overhead account of $820. Which of the following is the year−end adjusting entry needed to adjust the account? A. A debit to Cost of Goods Sold of $820 and a credit to Manufacturing Overhead of $820 B. A debit to Cost of Goods Sold of $820 and a credit to Finished Goods Inventory of $820 C. A debit to Manufacturing Overhead of $820 and a credit to Cost of Goods Sold of $820 D. A debit to Manufacturing Overhead of $820 and a credit to Finished Goods Inventory of $820arrow_forward
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning