Question

I need help in part b) please! Thank You!

Problem 3-3 (Part Level Submission) A review of the ledger of Metlock, Inc. at December 31 produces the following data for the preparation of annual adjusting entries: 1. Salaries and Wages Payable, 0. There are 8 salaried employees. 4 employees receive a salary of $1,180 each per week, and 4 employees earn 2. Unearned Rent Revenue, $446,780. The company began subleasing condos in its new building on November 1. Each tenant has to make a $680 each per week. Employees do not work weekends. All employees worked two days after the last pay period and before December 31 $5,150 security deposit that is not refundable until occupancy is ended. At December 31, the company had the following rental contracts that were paid in full for the entire term of the lease: Term Number Date Nov. 1 Dec. 1 (in months) 6 6 Monthly Rent $4,080 $10,350 of Leases 6 4 3. Prepaid Advertising, $15,480. This balance consists of payments on two advertising contracts. The contracts provide for monthly advertising in two trade magazines. The terms of the contracts are as follows Number of Contract Date Amount magazines Issues $7,560 7,920 A650 May 1 Oct. 1 12 B974 24 The first advertisement runs in the month in which the contract is signed Notes Payable, $82,680. This balance consists of a one year, 796, note that is dated June 1 4.

Answer 1

Answer---Newt income is understated by $ 77,978

Adjustments	Amount
Increase in salaries and wages expense	$      (2,976.00)
Revenue earned in current period	$      90,360.00
Advertisement expenses recorded	$      (6,030.00)
Interest expense recorded	$      (3,376.00)
Net income understated	$      77,978.00

Expenses recognition will decrease income so they are deducted and revenues under-recorded has been shown as positive figures as they increase net income.