Chapter 2 You are reviewing O\'Brian Co.\'s adjusted trial balance for the year

Question

Chapter 2 You are reviewing O'Brian Co.'s adjusted trial balance for the year ended 12/31/16. You notice several omissions and incorrect items during your review, some of which are noted below. For each one, you are to determine what effect, if any, these items would have on the stated components of O'Brian Co.'s 2016 Income Statement and 12/31/16 Balance Sheet if they are not corrected or updated. Assume no income taxes. Use the following code for your answers. You need not include any dollar amounts. N No Effect O Overstated U Understated Additional Information 12/31/16 Assets 12/31/16 Liabilities 12/31/16 Owners Equity 2016 Net Income Supplies purchased during the year for $1,000 cash were recorded by a debit to Supplies Expense and a credit to Cash. Only $200 of supplies remain at the end of the year,but no further entries have been recorded.

Explanation / Answer

Additional Information 12/31/16 12/31/16 12/31/16 12/31/16 Assets Liabilities Owners Equity Net Income Supplies purchase expenses shows for $ 1000 but there is balance of Supplies for $ 200. So Actual Supplies Expenses is only $ 800, $ 200 we will show as closing stock Oberstated No Effect Oberstated Reason When closing stock will increase then our current assets in assets side will increase No Effect This is due to increase in revenue and so Increase in retaiend earning in Onwer's Equity Closing Stock increase then net income also increase

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