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Calculate the Year-End Corrected Balances

On December 31, 2008 Tie One On reported net income for the year $265,000 and the following account balances

Cash $175,000
Accounts Receivable 21,000
Prepaid rent 6,000
Equipment & Furnishings 230,000
Accumulated Depreciation- equipment & Furnishings (43,000)
Accounts Payable 39,000
Wages payable 13,000
Owners equity(including net income of $265,000) 337,000

After this information was prepared, the book-keeper discovered that they failed to prepare two adjusting entries. These were not reflected in the balances shown. Here is the information on these two entries

1. The prepaid rent account was paid on April 1, 2008, for one year for $6,000. The account has not been adjusted since.
2. A bill received in January 2009 for utilities incurred in December 2008 for $1,400 was mistakenly not entered into the system.

Please calculate the year-end corrected balances for the following three accounts: assets, liabilities, and equity. You can enter your answer in the following format

For example:

Assets = $X (show your work in parentheses, numbers only, no titles necessary.

Solution Preview

1. The prepaid rent account was paid in April for $6,000 and was never adjusted. Therefore, rent expense = 6,000 / 12 = 500 per month. April 1 to 12/31 = 9 months. 500 x 9 = 4500. ...

Solution Summary

This solution provides the corrected year-end balances for assets, liabilities, and equity. Accumulated depreciation for equipment and furnishings is examined.