On December 31, 2018, Alan and Company prepared an income statement and balance sheet but failed to take into account four adjusting journal entries. The income statement, prepared on this incorrect basis, reported income before income tax of $34,000. The balance sheet (before the effect of income taxes) reflected total assets, $98,000; total liabilities, $44,000; and stockholders' equity, $54,000. The data for the four adjusting journal entries follow: a. Effect of Amortization of $8,800 for the year on software was not recorded. b. Salaries and Wages amounting to $17,800 for the last three days of December 2018 were not paid and not recorded (the next payroll will be on January 10, 2019). c. Rent revenue of $6,000 was collected on December 1, 2018, for office space for the three-month period December 1, 2018, to February 28, 2019. The $6,000 was credited in full to Deferred Revenue when collected. d. Income taxes were not recorded and not paid. The income tax rate for the company is 20%. Required: Complete the following table to show the effects of the four adjusting journal entries. (Negative amounts should be indicated by a minus sign.) Items Net Income Total Assets Total Liabilities Stockholders' Equity Amounts reported $ 34,000 $ 98,000 $ 44,000 $ 54,000 a. Effect of amortization b. Effect of salaries and wages c. Effect of rent revenue Adjusted balances d. Effect of income tax Correct amounts
On December 31, 2018, Alan and Company prepared an income statement and balance sheet but failed to take into account four adjusting journal entries. The income statement, prepared on this incorrect basis, reported income before income tax of $34,000. The balance sheet (before the effect of income taxes) reflected total assets, $98,000; total liabilities, $44,000; and stockholders' equity, $54,000. The data for the four adjusting journal entries follow: a. Effect of Amortization of $8,800 for the year on software was not recorded. b. Salaries and Wages amounting to $17,800 for the last three days of December 2018 were not paid and not recorded (the next payroll will be on January 10, 2019). c. Rent revenue of $6,000 was collected on December 1, 2018, for office space for the three-month period December 1, 2018, to February 28, 2019. The $6,000 was credited in full to Deferred Revenue when collected. d. Income taxes were not recorded and not paid. The income tax rate for the company is 20%. Required: Complete the following table to show the effects of the four adjusting journal entries. (Negative amounts should be indicated by a minus sign.) Items Net Income Total Assets Total Liabilities Stockholders' Equity Amounts reported $ 34,000 $ 98,000 $ 44,000 $ 54,000 a. Effect of amortization b. Effect of salaries and wages c. Effect of rent revenue Adjusted balances d. Effect of income tax Correct amounts
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 11P: A review of Anderson Corporations books indicates that the errors and omissions pertaining to the...
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Transcribed Image Text:On December 31, 2018, Alan and Company prepared an income statement and balance sheet but failed to take into account four
adjusting journal entries. The income statement, prepared on this incorrect basis, reported income before income tax of $34,000. The
balance sheet (before the effect of income taxes) reflected total assets, $98,000; total liabilities, $44,000; and stockholders' equity,
$54,000. The data for the four adjusting journal entries follow:
a. Effect of Amortization of $8,800 for the year on software was not recorded.
b. Salaries and Wages amounting to $17,800 for the last three days of December 2018 were not paid and not recorded (the next
payroll will be on January 10, 2019).
c. Rent revenue of $6,000 was collected on December 1, 2018, for office space for the three-month period December 1, 2018, to
February 28, 2019. The $6,000 was credited in full to Deferred Revenue when collected.
d. Income taxes were not recorded and not paid. The income tax rate for the company is 20%.
Required:
Complete the following table to show the effects of the four adjusting journal entries. (Negative amounts should be indicated by a
minus sign.)
Items
Net Income
Total Assets
Total Liabilities
Stockholders' Equity
Amounts reported
$
34,000 $
98,000 $
44,000 $
54,000
a. Effect of amortization
b. Effect of salaries and wages
c. Effect of rent revenue
Adjusted balances
d. Effect of income tax
Correct amounts
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