On December 31, 2008 Tie One On reported net income for the year $265,000 and the following account balances
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.
Assets = $X (show your work in parentheses, numbers only, no titles necessary.
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. ...
This solution provides the corrected year-end balances for assets, liabilities, and equity. Accumulated depreciation for equipment and furnishings is examined.