Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter 3, Problem 3.19AE
LO 1, 3
(Learning Objectives 1, 3: Explain how accrual accounting differs from cash-basis accounting; adjust the accounts) An accountant made the following adjustments at December 31, the end of the accounting period:
- a. Prepaid insurance, beginning, $500. Payments for insurance during the period, $2,000. Prepaid insurance, ending, $400.
- b. Interest revenue accrued, $2,500.
- c. Unearned service revenue beginning, $1,700. Unearned service revenue, ending, $300.
- d.
Depreciation on building, $5,600. - e. Employees salaries owed for two days of a five-day work week; weekly payroll, $19,000.
- f. Income before income tax, $21,000. Income tax rate is 35%.
Requirements
- 1. Journalize the
adjusting entries . - 2. Suppose the adjustments were not made. Calculate the overall overstatement or understatement of net income resulting from the omission of these adjustments.
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Chapter 3 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
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