Question

Exercise 242 On December 31, 2017, Colski Company prepared an income statement and balance sheet and failed to take into account three adjustments. The incorrect income statement showed net income of $40,000. The balance sheet showed total assets, $130,000; total liabilities, $60,000; and stockholders' equity, $70,000. The data for the three adjustments were (1) Depreciation of $9,000 was not recorded on equipment. (2) Salaries and wages amounting to $10,000 for the last two days in December were not paid and I not recorded. The next payroll will be in January. (3) Rent of $8,000 was paid for two months in advance on December 1. The entire amount increased Prepaid Rent when paid. Complete the following tabulation to correct the financial statement. (If an amount reduces the account balance then enter using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Enter 0 for fields with no amounts.) Net Income Total Assets $40,000 $130,000 Total Liabilities Stockholders' Equity $60,000 $70,000 Item Incorrect balances Effects of: Depreciation Salaries and wages Rent Correct Balances Click if you would like to Show Work for this question: Open Show Work

Answer 1

Table

Item	Net income	Total assets	Total liabilities	Stockholder's equity
Incorrect balances	40000	130000	60000	70000
Effects of
Depreciation	-9000	-9000		-9000
Salaries and wages	-10000		10000	-10000
Rent	-4000	-4000		-4000
Correct balances	17000	117000	70000	47000