Determine the correct amount of net income for March and the total assets, liabilities, and owner’s… 1 answer below »

PR 3-6B Adjusting entries and errors

At the end of March, the first month of operations, the following selected data were taken from the financial statements of Kurt Reibel, an attorney:

Net income for March

$150,000

Total assets at March 31

1,000,000

Total liabilities at March 31

350,000

Total owner’s equity at March 31

650,000

In preparing the financial statements, adjustments for the following data were overlooked:

a. Unbilled fees earned at March 31, $15,000.

b. Depreciation of equipment for March, $9,000.

c. Accrued wages at March 31, $3,500.

d. Supplies used during March, $2,000.

Instructions

1. Journalize the entries to record the omitted adjustments.

2. Determine the correct amount of net income for March and the total assets, liabilities, and owner’s equity at March 31. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. Adjustment (a) is presented as an example.

Net

Total

Total

Total Owner’s

Income

Assets +

Liabilities =

Equity

Reported amounts

$150,000

$1,000,000

$350,000

$650,000

Corrections:

+ 15,000

+ 15,000

0

+ 15,000

Adjustment (a)

Adjustment (b)

Adjustment (c)

Adjustment (d)

Corrected amounts

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