E3-28 Journalizing adjusting entries and analyzing their effect on the income st
ID: 2555283 • Letter: E
Question
E3-28 Journalizing adjusting entries and analyzing their effect on the income statement
Learning Objectives 3, 5 The following data at July 31, 2018, are given for RCO:
Depreciation, $600.
Prepaid rent expires, $200.
Interest expense accrued, $700.
Employee salaries owed for Monday through Thursday of a five-day workweek; weekly payroll, $8,000.
Unearned revenue earned, $1,000.
Office supplies used, $150.
Requirements Journalize the adjusting entries needed on July 31, 2018. Suppose the adjustments made in Requirement 1 were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.
Explanation / Answer
Answer
Date - July 31, 2018
General Journal
Debit ($)
Credit ($)
Net Income Increases (Decreases)
1
Depreciation expense
$ 600.00
$ (600.00)
Accumulated Depreciation
$ 600.00
2
Rent expenses
$ 200.00
$ (200.00)
Prepaid Rent
$ 200.00
3
Interest expense
$ 700.00
$ (700.00)
Interest payable
$ 700.00
4
Salaries expense
$ 8,000.00
$ (8,000.00)
Salaries Payable
$ 8,000.00
5
Revenue
$ 1,000.00
$ 1,000.00
Unearned Revenue
$ 1,000.00
6
Supplies expense
$ 150.00
$ (150.00)
Supplies
$ 150.00
TOTAL
$ 10,650.00
$ 10,650.00
$ (8,650.00)
Date - July 31, 2018
General Journal
Debit ($)
Credit ($)
Net Income Increases (Decreases)
1
Depreciation expense
$ 600.00
$ (600.00)
Accumulated Depreciation
$ 600.00
2
Rent expenses
$ 200.00
$ (200.00)
Prepaid Rent
$ 200.00
3
Interest expense
$ 700.00
$ (700.00)
Interest payable
$ 700.00
4
Salaries expense
$ 8,000.00
$ (8,000.00)
Salaries Payable
$ 8,000.00
5
Revenue
$ 1,000.00
$ 1,000.00
Unearned Revenue
$ 1,000.00
6
Supplies expense
$ 150.00
$ (150.00)
Supplies
$ 150.00
TOTAL
$ 10,650.00
$ 10,650.00
$ (8,650.00)
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