Question

PROBLEM 3-6A Adjusting entries and errors aken from the financial statements of Kay Lopez, an attorney Objective 3 At the end of July, the first month of operations, the following selected data were Net income for July Total assets at July 31 Total liabilities at July 31 124,350 500,000 125,000 Total owner's equity at July 31 375,000 In preparing the financial statements, adjustments for the following data were over- looked: Corrected Net Income. $127,900 a. Unbilled fees eaned at July 31, S9,600. b. Depreciation of equipment for July, S3,500. c. Accrued wages at July 31, $1,450. d. Supplies used during July, $1,100. 1. Journalize the enries to record the omitted adjustments. 2. Determine the correct amount of net income for July and the total assets, liabil ities, and owner's equity at July 31. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a colum nar table similar to the following. Adjustment (a) is presented as an example. Net Total Total Total Income Owner's Equity Reported amounts $124,350 500,000 $125,000 $375,000 Adjustment (a) Adjustment (b) Adjustment (c) +9,600 +9,600 +9,600 Adjustment (d) Corrected a (a

Answer 1

	Account	Debit	Credit
a	Accounts Receivable	$ 9,600
	Revenue		$ 9,600
b	Depreciation	$ 3,500
	Accumulated Depreciation - Equipment		$ 3,500
c	Salaries and Wages Expense	$ 1,450
	Accrued Salaries and Wages		$ 1,450
d	Supplies Expense	$ 1,100
	Supplies		$ 1,100

	Net Income	Total Assets	Total Liabilities	Total Equity
Reported Amount	$ 124,350	$ 500,000	$ 125,000	$ 375,000
Corrections:
A	$        9,600	$        9,600	$               -	$        9,600
B	$     (3,500)	$     (3,500)		$     (3,500)
C	$     (1,450)		$        1,450	$     (1,450)
D	$     (1,100)	$     (1,100)		$     (1,100)
Corrected Amount	$ 127,900	$ 505,000	$ 126,450	$ 378,550