Analyzing the Effects of Adjusting Entries on the Income Statement and Balance Sheet
On December 31,2011, Yates Company prepared an income statement and balance sheet and failed to take into account four adjusting entries. The income statement, prepared on this incorrect basis, reflected pretax income of $60,000. The balance sheet (before the effect of income taxes) reflected total assets, $170.000; total liabilities, 580,000; and stockholders equity, $90.000. The data for the four adjusting entries follow:
a.Wages amounting to $39,000 for the last three days of December 2011 were not paid and not recorded (the next payroll will be on January 10. 2012).
b.Depreciation of $17,000 for the year on equipment that cost $170.000 was not recorded.
c.Rent revenue of $9,600 was collected on December 1. 2011 . for office space for the period December 1. 2011. to February 28. 2012. The $9.600 was credited in full to Unearned Rent Revenue when collected.
d.Income taxes were not recorded. The income tax rate for the company is 30 percent.
Required:
Complete the following tabulation to correct the financial statements for the effects of the four errors (indicate deductions with parentheses):
Items | Net Income | Total Assets | Total Liabilities | Stockholders’ Equity |
Balances reported | $60,000 | $170.000 | $80,000 | $90,000 |
Additional adjustments: | ||||
a. Wages | – | – | – | – |
b. Depreciation | – | – | – | – |
c. Rent revenue | – | – | – | – |
Adjusted balances | – | – | – | – |
d. Income taxes | – | – | – | – |
Correct balances | – | – | – | – |
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.