Question

E Business Course Return to our My Stories Cure . Www Analysis of the impact of Adjustments on Financial Statements the the following amounts first month of the Stephen Company's prepared financial statement in preparing the countant overlooked the following Den the correct amounts of andere 20.00 Net Previous MacBook Air 20 BES 1 $ 4 % 5 7 8 1 2 3 1 O P W R Y E T Q ob

Analysis of the Impact of Adjustments on Financial Statements At the end of the first month of operations, the Stephan Company’s accountant prepared financial statements that showed the following amounts:

Assets $60,000 Liabilities 20,000 Stockholders' Equity 40,000 Net Income 9,000

In preparing the statements, the accountant overlooked the following items:

a. Depreciation for the month. $925 b. Service revenue earned but unbilled at month-end. 1,500 c. Employee wages earned but unpaid at month-end. 410

Determine the correct amounts of assets, liabilities and stockholders' equity at month-end and net income for the month.

Assets Liabilities Stockholders' Equity Net Income

Answer 1

Corrected Net Income:

Particulars	Amount ($)
Net Income	9,000.00
Less: Depreciation	925.00
Add: Service revenue earned but unbilled at month-end	1,500.00
Less: Unpaid Wages	410.00
Net Income after all adjustments	9,165.00

Corrected Asset:

Particulars	Amount($)
Assets	60,000.00
Add: Unearned Revenue	1,500.00
Revised Value of Assets	61,500.00

Corrected Liability:

Particulars	Amount ($)
Liabilities	20,000.00
Add: Depreciation for the month	925.00
Add: Unpaid Wages	410.00
Revised Value of Liability	21,335.00

Corrected Shareholders' Equity:

Particulars	Amount ($)
Shareholders' Equity	40,000.00
Add: Additional Net Income (9,165-9,000)	165.00
Revised Value of shareholders' Equity	40,165.00

Therefore,

Assets = Liability + Shareholders' Equity

or, 61,500 = 21,335 + 41,165

Net Income = 9,165.00