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The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($34,900) and (b) accrued wages ($12,770). Indicate the effect of each error, considered individually, on the income state- ment for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect the item. Error (a) Error (b) Under- stated Over- stated Under- stated Over- stated $. 1. Revenue for the year would be 2. Expenses for the year would be 3. Net income for the year would be 4. Assets at July 31 would be 5. Liabilities at July 31 would be 6. Stockholders'equity at July 31 would be 2$ 2$ 24 2$ $. $. $. 24 2$ $. $. Obj. 2, 3, 5 EX 3-24 Effects of errors on financial statements If the net income for the current year had been $196,400 in Exercise 3-23, what would have been the correct net income if the proper adjusting entries had been made? %24 %24 %is %24

The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($34,900) and (b) accrued wages ($12,770). Indicate the effect of each error, considered individually, on the income state- ment for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect the item. Error (a) Error (b) Under- stated Over- stated Under- stated Over- stated $. 1. Revenue for the year would be 2. Expenses for the year would be 3. Net income for the year would be 4. Assets at July 31 would be 5. Liabilities at July 31 would be 6. Stockholders'equity at July 31 would be 2$ 2$ 24 2$ $. $. $. 24 2$ $. $. Obj. 2, 3, 5 EX 3-24 Effects of errors on financial statements If the net income for the current year had been $196,400 in Exercise 3-23, what would have been the correct net income if the proper adjusting entries had been made? %24 %24 %is %24

Financial & Managerial Accounting
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter9: Fixed Assets And Intangible Assets
Section: Chapter Questions
Problem 9.23EX
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I will send you 2 exercises but the one I will need is 3-24 because you have to use 3-23 as an example to do 3-24.
142 Chapter 3 The Adjusting Process EX 3-20 Book value of fixed assets In a recent balance sheet, Microsoft Corporation (MSFT) reported Property, Plant, and Fqut ment of $38,156 million and Accumulated Depreciation of $19,800 million. Obj. 4 REAL WORLD What was the book value of the fixed assets? a b. market values? Would the book value of Microsoft's fixed assets normally approximate their fair EX 3-21 Effects of errors on financial statements For a recent period, the balance sheet for Costco Wholesale Corporation (COST) reported accrued expenses of $3,498 million. For the same period, Costco reported income before income taxes of $3,619 million. Assume that the adjusting entry for $3,498 million of accrued expenses was not recorded at the end of the current period. What would have been the income (loss before income taxes? Obj. 2, 5 REAL WORLD EX 3-22 Effects of errors on financial statements For a recent year, the balance sheet for The Campbell Soup Company (CPB) includes accrued expenses of $604 million. The income before taxes for Campbell for the year was $849 million. a. Assume the adjusting entry for $604 million of accrued expenses was not recorded at the end of the year. By how much would income before taxes have been misstated? Obj. 2, 5 REAL WORLD b. What is the percentage of the misstatement in (a) to the reported income of $849 million? Round to one decimal place. EX 3-23 Effects of errors on financial statements Obj. 2, 3,5 The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($34,900) and (b) accrued wages ($12,770). Indicate the effect of each error, considered individually, on the income state- ment for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect the item. V1. a. Revenue derstated, $34,900 Error (a) Error (b) Under- stated Over- stated Under- stated Over- stated 1. Revenue for the year would be 2$ 2. Expenses for the year would be 3. Net income for the year would be 4. Assets at July 31 would be 5. Liabilities at July 31 would be 6. Stockholders' equity at July 31 would be 2$ 2$ %24 24 2$ 2$ 2$ Obj. 2, 3, 5 Y EX 3-24 Effects of errors on financial statements If the net income for the current year had been $196,400 in Exercise 3-23, what would have been the correct net income if the proper adjusting entries had been made? Obj. 4, 5 EX 3-25 Adjusting entries for depreciation; effect of error On December 31, a business estimates depreciation on equipment used during the first year of operations to be $13,900. ME HOW a. Journalize the adjusting entry required as of December 31. b. If the adjusting entry in (a) were omitted, which items would be erroneously stated on (1) the income statement for the year and (2) the balance sheet as of December 31? Obj. 6 EX 3-26 Adjusting entries from trial balances The unadjusted and adjusted trial balances for American Leaf Company on October 31, 20Y2, follow:
Transcribed Image Text:142 Chapter 3 The Adjusting Process EX 3-20 Book value of fixed assets In a recent balance sheet, Microsoft Corporation (MSFT) reported Property, Plant, and Fqut ment of $38,156 million and Accumulated Depreciation of $19,800 million. Obj. 4 REAL WORLD What was the book value of the fixed assets? a b. market values? Would the book value of Microsoft's fixed assets normally approximate their fair EX 3-21 Effects of errors on financial statements For a recent period, the balance sheet for Costco Wholesale Corporation (COST) reported accrued expenses of $3,498 million. For the same period, Costco reported income before income taxes of $3,619 million. Assume that the adjusting entry for $3,498 million of accrued expenses was not recorded at the end of the current period. What would have been the income (loss before income taxes? Obj. 2, 5 REAL WORLD EX 3-22 Effects of errors on financial statements For a recent year, the balance sheet for The Campbell Soup Company (CPB) includes accrued expenses of $604 million. The income before taxes for Campbell for the year was $849 million. a. Assume the adjusting entry for $604 million of accrued expenses was not recorded at the end of the year. By how much would income before taxes have been misstated? Obj. 2, 5 REAL WORLD b. What is the percentage of the misstatement in (a) to the reported income of $849 million? Round to one decimal place. EX 3-23 Effects of errors on financial statements Obj. 2, 3,5 The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($34,900) and (b) accrued wages ($12,770). Indicate the effect of each error, considered individually, on the income state- ment for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect the item. V1. a. Revenue derstated, $34,900 Error (a) Error (b) Under- stated Over- stated Under- stated Over- stated 1. Revenue for the year would be 2$ 2. Expenses for the year would be 3. Net income for the year would be 4. Assets at July 31 would be 5. Liabilities at July 31 would be 6. Stockholders' equity at July 31 would be 2$ 2$ %24 24 2$ 2$ 2$ Obj. 2, 3, 5 Y EX 3-24 Effects of errors on financial statements If the net income for the current year had been $196,400 in Exercise 3-23, what would have been the correct net income if the proper adjusting entries had been made? Obj. 4, 5 EX 3-25 Adjusting entries for depreciation; effect of error On December 31, a business estimates depreciation on equipment used during the first year of operations to be $13,900. ME HOW a. Journalize the adjusting entry required as of December 31. b. If the adjusting entry in (a) were omitted, which items would be erroneously stated on (1) the income statement for the year and (2) the balance sheet as of December 31? Obj. 6 EX 3-26 Adjusting entries from trial balances The unadjusted and adjusted trial balances for American Leaf Company on October 31, 20Y2, follow:
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