Question

QUESTION 54 Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted, will overstate or understate assets, liabilities, owner's equity, revenues, expenses, or net income. Indicate the amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-) for understate, and (NE) for no effect. 1. Morrison purchased supplies on December 1 for $900. On December 31, $700 of supplies were on hand. 2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 3 years of insurance. 3. The unearned rent revenue account has a credit balance of $480 on December 1, which represents 3 months rent. Assets Liabilities Owner's Equity Revenues Expenses Net Income Transaction 1. 2. 3.

Answer 1

Question 54 Transaction Assets Liabilities Owner's Equity Revenues Expenses Net Income 1 + 200 NE + 200 NE - 200 + 200 2 + 150 NE + 150 NE - 150 + 150 3 NE + 160 - 160 160 NE - 160 Question 56 а b Recorded Normal as Balance Cr. 1 Cr. 2 Dr. Dr. Dr. 3 Cr. 4 Cr. Cr. 5 Cr. Increase in Denice Dickenson, Capital Increase in Denice Dickenson, Drawing Decrease in Accounts Receivable Increase in Note Payable Increase in Accounts Payable Decrease in Supplies Decrease in Salaries Expense Increase in Accounts Receivable Increase in Cash Decrease in Land 6 Cr. Cr. Dr. Dr. 7 Cr. 8 Dr. Dr. Dr. 9 Dr. 10 Cr. Dr. Note: Please comment down for any further clarifications.