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Adjusting entries and financial statement

At the end of the fiscal year, the following adjusting entries were omitted:
(a) No adjusting entry was made to transfer the $3,000 of prepaid insurance from the asset account to the expense account.
(b) No adjusting entry was made to record accrued fees of $500 for services provided to customers.

Assuming that financial statements are prepared before the errors are discovered, indicate the effect of each error, considered individually, by inserting the dollar amount in the appropriate spaces. Insert "0" if the error does not affect the item.
Error (a) Error (b)
Over-stated Under-stated Over-stated Under-stated
(1) Assets at December 31 would be $ $ $ $

(2) Liabilities at Dec. 31 would be $ $ $ $

(3) Net income for the year would be $ $ $ $

(4) Retained earnings at Dec. 31 would be $ $ $ $

Solution Preview

Accounting_financial statements
At the end of the fiscal year, the following adjusting entries were omitted:
(a) No adjusting entry was made to transfer the $3,000 of prepaid insurance from the asset account to the expense account.
Entry missing:
Insurance Expense 3,000
Prepaid Insurance 3,000

(b) No adjusting entry was ...

Solution Summary

The expert examines calculations of adjusting entries and creating of the financial statements.

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