Financial Accounting
9th Edition
ISBN: 9781259738692
Author: Libby
Publisher: MCG
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Textbook Question
Chapter 4, Problem 4.18E
Recording the Effects of
On December 31, the bookkeeper for Grillo Company prepared the following income statement and balance sheet summarized here but neglected to consider three adjusting entries.
As Prepared | Effects of Adjusting Entries | Corrected Amounts | |
Income Statement | |||
Revenues | $ 97,000 | _______ | _______ |
Expenses | (73,000) | _______ | _______ |
Income tax expense | _______ | _______ | _______ |
Net income | $24,000 | ||
Balance Sheet | |||
Assets | |||
Cash | $20,000 | _______ | _______ |
22,000 | _______ | _______ | |
Rent receivable | _______ | _______ | |
Equipment | 50,000 | _______ | _______ |
(10,000) | _______ | _______ | |
$82,000 | |||
Liabilities | |||
Accounts payable | $10,000 | _______ | _______ |
Income taxes payable | _______ | _______ | |
Stockholders’ Equity | |||
Common stock | 10,000 | _______ | _______ |
Additional paid-in capital | 30,000 | _______ | _______ |
Retained comings | 32,000 | _______ | _______ |
$82,000 |
Data on the three adjusting entries follow:
- a. Rent revenue of $2,500 earned in December of the current year was neither collected nor recorded.
- b. Depreciation of $4,500 on the equipment for the current year was not recorded.
- c. Income tax expense of $5,100 for the current year was neither paid nor recorded.
Required:
- 1. Prepare the three adjusting entries that were omitted. Use the account titles shown in the income statement and balance sheet data.
- 2. Complete the two columns to the right in the preceding tabulation to show the effects of the adjusting entries and the corrected amounts on the income statement and balance sheet.
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Chapter 4 Solutions
Financial Accounting
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