Journalizing adjusting entries and analyzing their effect on the income statement [5-10 min]
The following data at January 31, 2013 is given for EBM, Inc.
a. Depreciation, $500.
b. Prepaid rent expired, $600.
c. Interest expense accrued, $300.
d. Employee salaries owed for Monday through Thursday of a five-day workweek; weekly payroll, $13,000.
e. Unearned service revenue earned, $1,300.
Requirements
1. Journalize the adjusting entries needed on January 31, 2013.
2. Suppose the adjustments made in Requirement 1 were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.
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