Insurance Expense    10,830

    Prepaid Insurance                10,830

The balance in the unearned fees account, before adjustment at the end of the year is $40,865.

What is the adjustment entry required for the amount (18,390) of unearned fees at the end of the year?

Unearned Fees    22,475

     Fees Earned                   22,475

40,865 - 18,390 = 22,475

The adjusting entry transferring rent earned to a revenue account from the unearned rent account was omitted. Indicate which items will be incorrectly stated, because of the error on the income statement and the balance sheet. 

Income Statement:

Rent Revenue

Net Income 

Balance Sheet: 

Unearned Rent

Stockholders' Equity

Income Statement:

Rent Revenue - Understated

Net Income - Understated

Balance Sheet: 

Unearned Rent - Overstated

Stockholders' Equity - Understated

The adjusting entry for accrued fees was omitted. Indicate which items will be in error, because of the omission on the income statement and the balance sheet.

Income Statement:

Fees Earned

Net Income 

Balance Sheet:

Accounts Receivable

Stockholders' Equity

Income Statement:

Fees Earned - Understated

Net Income - Overstated

Balance Sheet:

Accounts Receivable - Understated

Stockholders' Equity - Understated

Accrued salaries owed to employees were omitted. Indicate which items will be erroneously stated in the income statement and the balance sheet. 

Income Statement:

Salaries Expense

Net Income

Balance Sheet:

Salaries Payable

Stockholders' Equity

Income Statement:

Salaries Expense - Understated

Net Income - Overstated

Balance Sheet:

Salaries Payable - Understated

Stockholders' Equity - Overstated

Taxes Expenses     $xxx

      Prepaid Taxes                $xxx

Book Value of Fixed Assets

(Equation)

In a recent balance sheet, Microsoft Corporation reported Property, Plant, and Equipment of $16,259 million and accumulated depreciation of $8,629 million. 

What was the book value of the fixed assets?

$7,630

16,259 - 8,629 = 7,630

The accountant for Astaire Medical Co., mistakenly omitted an adjusting entry for unearned revenue ($23,250). 

Indicate the effect of the error in regards to:

1. Revenue
2. Expenses
3. Net Income 
4. Assets
5. Liabilities
6. Stockholders' Equity

1. Revenue for the year would be understated
2. Expenses for the year would be unaffected
3. Net income for the year would be understated
4. Assets would be unaffected
5. Liabilities would be overstated 
6. Stockholders' equity would be understated

The accountant for Astaire Medical Co., mistakenly omitted an adjusting entry for accrued wages ($4,000). 

Indicate the effect of the error in regards to:

1. Revenue
2. Expenses
3. Net Income
4. Assets 
5. Liabilities
6. Stockholders' Equity

1. Revenue for the year would be unaffected
2. Expenses for the year would be understated
3. Net income for the year would be overstated
4. Assets would be unaffected
5. Liabilities would be understated
6. Stockholders' equity would be overstated

Name 8 Pairs of Adjusting Entries

Hint: Accounts Receivable, Supplies Expense, Rent Expense, Insurance Expense, Depreciation Expense, Wages Expense, Unearned Fees, Unearned Rent, Taxes Expense

Accounts Receivable

      Fees Earned

Supplies Expense

     Supplies

Rent Expense

      Prepaid Rent

Insurance Expense 

     Prepaid Insurance

Depreciation Expense

     Accumulated Depreciation

Wages Expense

     Wages Payable

Unearned Fees

      Fees Earned

Unearned Rent

      Rent Revenue

Taxes Expense

      Prepaid Taxes            

Mathematical Adjustment Entries will be required for the following adjustment entries:

Hint: 4 Accounts

Supplies Expense

       Supplies

Unearned Rent

       Rent Revenue

Insurance Expense

       Prepaid Insurance

Unearned Fees

        Fees Earned

When omitting an adjusting entry a liability account will be affected oppositely from the stockholders' equity account.

True 

False