Question

Required information [The following information applies to the questions displayed below.] Dyer, Inc., completed its first year of operations on December 31, 2018. Because this is the end of the annual accounting period, the company bookkeeper prepared the following preliminary income statement: $113,500 Income Statement, 2018 Rent Revenue Expenses: Salaries and Wages Expense $28,400 Repairs and Maintenance Expense 12,900 Rent Expense 8,900 Utilities Expense 3,900 Travel Expense 2,900 Total Expenses Income 57,000 $ 56,500 You are an independent CPA hired by the company to audit the firm's accounting systems and financial statements. In your audit, you developed additional data as follows: a. Wages for the last three days of December amounting to $300 were not recorded or paid. b. The $390 telephone bill for December 2018 has not been recorded or paid. c. Depreciation of equipment amounting to $22,900 for 2018 was not recorded. d. Interest of $490 was not recorded on the notes payable by Dyer, Inc. e. The Rental Revenue account includes $3,900 of revenue to be earned in January 2019. f. Supplies costing $590 were used during 2018, but this has not yet been recorded. g. The income tax expense for 2018 is $6,900, but it won't actually be paid until 2019. 3-a. Did the adjustments have a significant overall effect on the company's net income? Yes O No 3-b. By what dollar amount did net income change as a result of the adjustments? Change in Net Income

Answer 1

Answes

3a. The correct option is Yes (As the same can be seen in second part of the question)

3b.

Net Income Before Adjustments = $56,500

Net Income After Adjustments (WN#1) = $21,030

Change in Net Income = -$35,480

WN#1, Net Income After Adjustments

DYERS INC
Income Statement
Particulars	Amount	Amount
Rent revenue (113500-3900)		109600
Expense
Salaries and wages expense (28400+300)	28700
Repairs and maintenance expense	12900
Rent expense	8900
Utilities expense	3900
Travel expense	2900
Telephone expense	390
Depreciation expense	22900
Interest expense	490
Supplies expense	590
Total expense		81670
Income before tax		27930
Income tax		6900
Net income (After Adjustments)		21030