Question

Primo Landscaping commenced its business on January 1, On December 31, Primo Landscaping did not record any adjusting entries with respect to the following transactions: a. During the first year of its operations, Primo purchased supplies in the amount of $10,000 (debited to "Supplies expense"), and of this amount, $3,000 were unused as of December 31 b. On March 15, Primo received $36,000 for landscape maintenance services to be rendered for 24 months (beginning July 1). This amount was credited to "Landscaping revenue." c. The company's fuel bill for $1,300 for the month of December was not received until January 15 of the following year. d. The company borrowed $100,000 from First Bank on April lat an interest rate of 12% per year. The principal, along with all of the interest, is due on March 30, 2019 e. On January 17, the company purchased a backhoe for $65,000. The backhoe is expected to last for 10,000 hours and have no salvage value. During the year, Primo operated the backhoe for 500 hours. Required: Complete the table below, showing the effect of the omission of each year-end adjusting entry on assets, liabilities, and net income. Use "OS" for overstated, "US" for understated, and "NE" for no effect

Answer 1

Liabilities a. Asset US 3000 NE b. US 24000 NE Net Income US 3000 OS 24000 os 1300 OS gooo OS 3250 1300 d. NE dagooo NE OS 3250