Determine the impact on the balance sheet accounts if the following information

Question

Determine the impact on the balance sheet accounts if the following information is not used to adjust the accounts of Mood Food Company for the month of January, 2013: (Round to nearest dollar) The company completed work on a project during January that was not yet billed to the client. The client will be charged $3,100. None of these answers are correct. Assets overstated and Stockholders' Equity overstated by $3,100. Assets understated and Stockholders' Equity overstated by $3,100. Assets understated and Stockholders' Equity understated by $3,100. Assets overstated and Stockholders' Equity understated by $3,100.

Explanation / Answer

entry :

Accounts receivable    debit    3100                               [asset ]

Service revenue             credit 3100                              [Retained earning -stockholders equity]

correct option is : = Assets understated and Stockholders' Equity understated by $3,100

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