Business
Engineering
Math
Science
Social Science
Effect of omitting adjustments For the year ending April 30, Urology Medical Services Co. mistakenly omitted adjusting entries for (1) $1,400 of supplies that were used, (2) unearned revenue of $6,600 that was earned, and (3) insurance of $9,000 that expired. Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended April 30.
Financial And Managerial Accounting
Solutions
Financial And Managerial Accounting
Effect of omitting adjustments
For the year ending April 30, Urology Medical Services Co. mistakenly omitted adjusting entries for (1) $1,400 of supplies that were used, (2) unearned revenue of $6,600 that was earned, and (3) insurance of $9,000 that expired. Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended April 30.
Determine the effects on the revenue, expense, and net income, if the adjusting entries are not recorded.
Explanation of Solution
Adjusting entries:
Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).
1. Supplies expense
Given entry would increase the supplies expense account, and decrease the supplies account. If the adjusting entry for supplies expense is not recorded, and it will affect two accounts such as supplies expense (expense), and supplies (asset) account. Hence the supplies expense of $1,400 has been understated the total value of expenses of the business, and it overstated the value of net income of the business.
2. Unearned revenue
Given entry would increase the revenue account, and decrease the unearned revenue account...
Chapter 3 Solutions
Additional Business Textbook Solutions
Accounting Information Systems
Financial & Managerial Accounting
Cornerstones of Financial Accounting
Corporate Financial Accounting
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Principles of Macroeconomics (MindTap Course List)
Essentials of Business Communication (MindTap Course List)
Principles of Economics (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
Foundations of Business (MindTap Course List)
Probability and Statistics for Engineering and the Sciences
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Brief Principles of Macroeconomics (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Principles of Microeconomics (MindTap Course List)
Financial Accounting
College Accounting, Chapters 1-27
Management, Loose-Leaf Version
Essentials of Economics (MindTap Course List)
Accounting Information Systems
Intermediate Accounting: Reporting And Analysis
College Accounting (Book Only): A Career Approach
Managerial Accounting: The Cornerstone of Business Decision-Making
Contemporary Marketing
MKTG 12:STUDENT ED.-TEXT
Financial & Managerial Accounting
Financial Accounting
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Accounting (Text Only)
College Accounting (Book Only): A Career Approach
Statistics for Business & Economics, Revised (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Exploring Economics
Fundamentals of Financial Management (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Survey of Accounting (Accounting I)
Corporate Financial Accounting
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Economics For Today
Microeconomics
Purchasing and Supply Chain Management
Cornerstones of Cost Management (Cornerstones Series)
Practical Management Science
Economics (MindTap Course List)
Macroeconomics
Managerial Accounting
Micro Economics For Today
Macroeconomics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
MACROECONOMICS FOR TODAY
Microeconomics: Private and Public Choice (MindTap Course List)
Principles of Microeconomics
Understanding Management (MindTap Course List)
