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At the end of May, the first month of operations, the following selected data we

ID: 2583380 • Letter: A

Question

At the end of May, the first month of operations, the following selected data were taken from the financial statements of Julie Mortenson, Attorney at Law, P.C.:

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

Unbilled fees earned at May 31, $8,530.

The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.Depreciation of equipment for May, $3,800.

Accrued wages at May 31, $2,730.

Supplies used during May, $2,390.

Determine the correct amount of net income for May and the total assets, liabilities, and stockholders' equity at May 31. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table below. Enter account decreases as negative amounts. If an effect is zero, enter "0". Adjustment (a) is presented as an example.   

Reported amounts:

Net income for May $168,400 Total assets at May 31 898,000 Total liabilities at May 31 296,000 Total stockholders' equity at May 31 602,000

Explanation / Answer

Net Income Total Assets = Total Liabilities + Total Stockholders' Equity Reported amounts: $168,400 $898,000 $296,000 $602,000 Corrections: Adjustment (a) 8530 8530 0 8530 Adjustment (b) -3800 -3800 -3800 Adjustment (c) -2730 2730 -2730 Adjustment (d) -2390 -2390 -2390 Corrected amounts $168,010 $900,340 $298,730 $601,610