Question

8. The net income reported on the income statement is $65,000. However, adjusting entries have not been made at the end of the period for depreciation expense of $15,000 and expired insurance of $10,450. Net income, as corrected, is ........................................................................................

9-11.

If the errors in Question 8 are not discovered and corrected, the effect on the financial statements will be as follows:

         9.    Total stockholders’ equity will be misstated (overstated or understated) by

over      $
under   $

      10.    Total revenues will be misstated (overstated or understated) by ...................

over      $
under   $

      11.    Total assets will be misstated (overstated or understated) by ........................

over      $
under   $

      12.    If the balance in the supplies account on January 1 is $20,500, supplies purchased during the year were $17,500, and the supplies on hand at December 31 were $8,500, the amount for the appropriate adjusting entry at December 31 is ..................................................................................................

        $

      13.    The number of supplies reported on the balance sheet on December 31,
based on the data in Question 12, is ...................................................................

        $

      14.    If the prepaid insurance account has a debit balance of $17,600 at the end of the month, before adjustment, and if the unexpired insurance at the end of the month was $10,500, the amount of prepaid insurance that would appear on the balance sheet, after adjustment, is ............................................

Answer 1