Question

At the end of May, the first month of operations, the following selected data were taken from the financial statements of Julie Mortenson, Attorney at Law, Р.С. : Net income for May Total assets at May 31 Total liabilities at May 31 Total stockholders' equity at May 31 $194,300 1,034,000 341,000 693,000 In preparing the financial statements, adjustments for the following data were overlooked a. Unbilled fees earned at May 31, $7,220 b. Depreciation of equipment for May, $3,200 C. Accrued wages at May 31, $2,310 d. Supplies used during May, $2,020 Determine the correct amount of net income for May and the total assets, liabilities, and stockholders' equity at May 31. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table below. Enter account decreases as negative amounts. If an effect is zero, enter "O". Adjustment (a) is presented as an example Net Income Total AssetsTotal Liabilities +Total Stockholders' Equity $341,000 Reported amounts Corrections: Adjustment (a) Adjustment (b) Adjustment (c) Adjustment (d) Corrected amounts $194,300 $1,034,000 $693,000 7,220 7,220 0 7,220 4,020

Answer 1

Computation of correct net income is as follows: