Effects of Omitting Adjustments For the year ending April 30, Safeguard Medical Services Co. mistakenly omitted adjusting entries for (1) $1,700 of supplies that were used, (2) unearned revenue of $8,000 that was earned, and (3) insurance of $10,900 that expired. Indicate the effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended April 30. (a) Revenues understated ✓ (b) Expenses understated (c) Net income overstated

Effects of Omitting Adjustments For the year ending April 30, Safeguard Medical Services Co. mistakenly omitted adjusting entries for (1) $1,700 of supplies that were used, (2) unearned revenue of $8,000 that was earned, and (3) insurance of $10,900 that expired. Indicate the effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended April 30. (a) Revenues understated ✓ (b) Expenses understated (c) Net income overstated

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter3: Basic Accounting Systems: Accrual Basis

Section: Chapter Questions

Problem 3.16E: Effect of omitting adjustment Assume that the error in Exercise 3-15 was not corrected and that the...

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Adjusting entries and errors At the end of August, the first month of operations, the following selected data were taken from the financial statements of Tucker Jacobs, an attorney: In preparing the financial statements, adjustments for the following data were overlooked: Unbilled fees earned at August 31, 31,900. Depreciation of equipment for August, 7,500. Accrued wages at August 31, 5,200. Supplies used during August, 3,000. Instructions 1. Journalize the entries to record the omitted adjustments. 2. Determine the correct amount of net income for August and the total assets, liabilities, and stockholders equity at August 31. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The first adjustment is presented as an example.
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