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 ($12,770). Indicate the effect of each error, considered individually, on the income statement for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect the item. Error (b) Error (a) Under- stated Under- stated Over- Over- stated stated 1. Revenue for the year would be 2$ 24 2. Expenses for the year would be 2$ 2$ 24 24 3. Net income for the year would be 4. Assets at July 31 would be 2$ 2$ 2$ 2$ 24 24 5. Liabilities at July 31 would be 6. Owner's equity at July 31 would be 2$ 2$

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 ($12,770). Indicate the effect of each error, considered individually, on the income statement for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect the item. Error (b) Error (a) Under- stated Under- stated Over- Over- stated stated 1. Revenue for the year would be 2$ 24 2. Expenses for the year would be 2$ 2$ 24 24 3. Net income for the year would be 4. Assets at July 31 would be 2$ 2$ 2$ 2$ 24 24 5. Liabilities at July 31 would be 6. Owner's equity at July 31 would be 2$ 2$

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter5: Accounting Systems

Section: Chapter Questions

Problem 19E: After Bunker Hill Assay Services Inc. had completed all postings for March in the current year...

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