Question

On December 31, 2020, Blossom Company prepared an income statement and balance sheet, but failed to take into account three adjusting entries. The balance sheet showed total assets $156,000, total liabilities $66,000, and owner's equity $83,000. The incorrect income statement showed net income of $71,000. The data for the three adjusting entries were: Salaries and wages amounting to $10,200 for the last 2 days in December were not paid and not recorded. The next payroll will be in January Rent payments of $7,700 was received for two months in advance on December 1. The entire amount was credited to Unearned Rent Revenue when paid 3. Depreciation expense for 2020 is $9.500. Complete the following table to correct the financial statement amounts shown internetve amounts using either a neutive in preceding the numberes-45 or parentheses (451) Item Incorrect balances. Effects of Net Income $71.000 Total Assets $156,000 Total Liabilities $60,000 Owner's Equity $83.000 Salaries and Wages Rent Revenue Depreciation Correct balances

Answer 1

Owner's Equity $83,000 Complete the following table to correct the financial statement amounts shown. Item Net Income Total Assets Total Liabilities Incorrect balances $71,000 $156,000 $66,000 Effects of: Salaries and Wages -10,200 10,200 Rent Revenue 3,850 -3,850 Depreciation -9.500 -9,500 Correct balances $55,150 $146.500 $72,350 -10,200 3,850 -9,500 $67,150 Explanation: 1. Salaries and wages amounting to $10,200 for the last 2 days in December were not paid and not recorded. The next payroll will be in January. Debit Salaries and Wages Expense Credit Salaries and Wages Payable $10.200 $10,200 2. Rent payments of $7,700 was received for two months in advance on December 1. The entire amount was credited to Unearned Rent Revenue when paid. Debit Unearned Rent Revenue ($7,700 (2) Credit Rent Revenue $3,850 $3,850 3. Depreciation expense for 2020 is $9,500 Debit Depreciation Expense Credit Accumulated Depreciation $9,500 $9,500