Question

Suppose that Laramie Company's adjusted trial balance ignored the following information. For each item of information, indicate what effects, if any, these omissions would have on the stated components of Laramie Company's 2021 Income Statement and 12/31/21 Balance Sheet. Assume no income taxes.

Use the following code for your answers and be sure to include the dollar amounts of the effects next to the letter O or U:

N = No Effect

O = Overstated

U = Understated

2)

Additional Information	12/31/21 Assets	12/31/21 Liabilities	12/31/21 Owners' Equity	2021 Net Income
$2,000 interest on a loan was not yet paid or recorded

3)

Additional Information	12/31/21 Assets	12/31/21 Liabilities	12/31/21 Owners' Equity	2021 Net Income
The estimated uncollectible accounts receivable is now zero and should be $25,000.

4)

Additional Information	12/31/21 Assets	12/31/21 Liabilities	12/31/21 Owners' Equity	2021 Net Income
$10,000 of the paid and recorded rent expense pertains to the year 2022.

5)

Additional Information	12/31/21 Assets	12/31/21 Liabilities	12/31/21 Owners' Equity	2021 Net Income
$20,000 in depreciation on some equipment was still unrecorded.

6)

Additional Information	12/31/21 Assets	12/31/21 Liabilities	12/31/21 Owners' Equity	2021 Net Income
$4,000 in cash dividends declared and paid in December 2021 were unrecorded.

Answer 1

2)
Additional Information	12/31/21 Assets	12/31/21	12/31/21	2021
		Liabilities	Owners' Equity	Net Income
$2,000 interest on a loan was not yet paid or recorded	N	U                2000	O                    2,000	O                    2,000

3)
Additional Information	12/31/21 Assets	12/31/21	12/31/21	2021
		Liabilities	Owners' Equity	Net Income
The estimated uncollectible accounts receivable is now zero and should be $25,000.	O                    25,000	N	O                    25,000	O                    25,000

4)
Additional Information	12/31/21 Assets	12/31/21	12/31/21	2021
		Liabilities	Owners' Equity	Net Income
$10,000 of the paid and recorded rent expense pertains to the year 2022.	U                10,000	N	U                10,000	U                10,000

5)
Additional Information	12/31/21 Assets	12/31/21	12/31/21	2021
		Liabilities	Owners' Equity	Net Income
$20,000 in depreciation on some equipment was still unrecorded.	O                    20,000	N	O                    20,000	O                    20,000

6)
Additional Information	12/31/21 Assets	12/31/21	12/31/21	2021
		Liabilities	Owners' Equity	Net Income
$4,000 in cash dividends declared and paid in December 2021 were unrecorded.	O                    4,000	N	O                    4,000	N