2. Prepare the journal entry to record the payment of rent on September 1. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "-" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Journal Income Statement Date Sept. 1 Description Prepaid Rent Cash ▾ Date Journal Debit Description Sept. 30 Rent Expense 13,140 Credit Debit 2,190 13,140 Credit Assets 2,190 3. Prepare the adjusting entry on September 30. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "-" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Balance Sheet Income Statement Balance Sheet Assets Liabilities + Liabilities Stockholders Equity Revenues Stockholders Equity Expenses Revenues Expenses Prepaid Rent 4. Assume that the accountant prepares the adjusting entry on September 30 but forgets to record an adjusting entry on December 31. Will net income for the year be understated or overstated? Overstated By what amount? S 6,570 Net Income Net Income
2. Prepare the journal entry to record the payment of rent on September 1. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "-" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Journal Income Statement Date Sept. 1 Description Prepaid Rent Cash ▾ Date Journal Debit Description Sept. 30 Rent Expense 13,140 Credit Debit 2,190 13,140 Credit Assets 2,190 3. Prepare the adjusting entry on September 30. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "-" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Balance Sheet Income Statement Balance Sheet Assets Liabilities + Liabilities Stockholders Equity Revenues Stockholders Equity Expenses Revenues Expenses Prepaid Rent 4. Assume that the accountant prepares the adjusting entry on September 30 but forgets to record an adjusting entry on December 31. Will net income for the year be understated or overstated? Overstated By what amount? S 6,570 Net Income Net Income
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter4: Income Measurement And Accrual Accounting
Section: Chapter Questions
Problem 4.6E: Prepaid Rent—Quarterly Adjustments On September 1, Northhampton Industries signed a six-month...
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