Chapter 3, Problem E3.28E

Journalizing adjusting entries and analyzing their effect on the income statement
Learning Objective 3, 5
The following data at July 31, 2018, are given for RCO:

1. Depreciation, $600.
2. Prepaid rent expires, $200.
3. Interest expense accrued, $700.
4. Employee salaries owed for Monday through Thursday of a five-day workweek; weekly payroll, $8,000.
5. Unearned revenue earned, $1,000.
6. Office supplies used, SISO.

Requirements

1. Journalize the adjusting entries needed on Jury 31, 2018.
2. Suppose the adjustments made in Requirement 1 were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.