Chapter 3, Problem S3.14SE

Determining the effects on financial statements

Learning Objective 5

In recording adjusting entries, Reagan Financial Advisors failed to record the adjusting entries for the following situations.

1. Office supplies on hand, $100.
2. Accrued revenues, $5,000.
3. Accrued interest expense, $250.
4. Depreciation, $800.
5. Unearned revenue that has been earned, $550.

Determine the effects on the income statement and balance sheet by identifying whether assets, liabilities, equity, revenue, and expenses are either overstated or understated. Use the following table. Adjustment a has been provided as an example.