Suppose that Laramie Company’s adjusted trial balance ignored the following information. For each item, indicate what...

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Suppose that Laramie Company’s adjusted trial balance ignored the following information. For each item, indicate what...

Suppose that Laramie Company’s adjusted trial balance ignored the following information. For each item, indicate what effects, if any, these omissions would have on the stated components of Laramie Company's 2021 Income Statement and 12/31/2021 Balance Sheet. Assume no income taxes.

Additional Information: $4,500 in cash dividends declared and paid in December 2021 were unrecorded.

12/31/2021 Assets

amount:

No effect, Understated, Overstated:

12/31/2021 Liabilities

amount:

No effect, understated, overstated:

amount:

12/31/2021 Owners’ Equity

amount:

No effect, understated, overstated:

2021 Net Income

amount:

No effect, Understated, Overstated:

business accounting

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Answer 1

Answer #1

Answer:

Particulars	Amount	Overstated/Understated	Reason
12/31/2021 Assets	$ 4,500	Overstated	Cash is paid but not recorded
12/31/2021 Liabilities	$ -	No effect	Dividends do not effect liabilities section
12/31/2021 Owner's equity	$ 4,500	Overstated	Dividend is paid but not reduced from retained earnings
12/31/2021 Net income	$ -	No effect	Dividends do not effect income statement

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Answer 2

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