Question

For the year ending December 31, Beard Clinical Supplies Co. mistakenly omitted adjusting entries for (1) $7,090 of unearned revenue that was earned, (2) earned revenue that was not billed of $8,970, and (3) accrued wages of $7,220. Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income. Choose understated or overstated and fill in the blank.

a. Revenues were (understated/overstated) by $______

b. Expenses were (understated/overstated) by $______

c. Net income was (understated/overstated) by $______

Answer 1

Number	Transaction	Revenues were (understated /overstated) by $	Expenses were (understated /overstated) by $	Net Income were (understated /overstated) by $
1	$7,090 of unearned revenue that was earned	$                             7,090	$                                            -	$                          7,090
2	earned revenue that was not billed of $8,970	$                             8,970	$                                            -	$                          8,970
3	accrued wages of $7,220		$                                     7,220	$                        (7,220)
	Total	$                           16,060	$                                     7,220	$                          8,840
	As per above total Revenue is understated by $ 16,060 and expenses is understated $ 7,220
	Overall net income is understated by $ ,8 840
Answer =
	Revenues were understated by $ 16,060
	Expenses were understated by $ 7,220
	Net income was understated by $ 8,840