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E3-28 Journalizing adjusting entries and analyzing their effect on the income st

ID: 2555283 • Letter: E

Question

E3-28 Journalizing adjusting entries and analyzing their effect on the income statement

Learning Objectives 3, 5 The following data at July 31, 2018, are given for RCO:

Depreciation, $600.

Prepaid rent expires, $200.

Interest expense accrued, $700.

Employee salaries owed for Monday through Thursday of a five-day workweek; weekly payroll, $8,000.

Unearned revenue earned, $1,000.

Office supplies used, $150.

Requirements Journalize the adjusting entries needed on July 31, 2018. Suppose the adjustments made in Requirement 1 were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.

Explanation / Answer

Answer

Date - July 31, 2018

General Journal

Debit ($)

Credit ($)

Net Income Increases (Decreases)

1

Depreciation expense

$        600.00

$     (600.00)

Accumulated Depreciation

$        600.00

2

Rent expenses

$        200.00

$     (200.00)

Prepaid Rent

$        200.00

3

Interest expense

$        700.00

$     (700.00)

Interest payable

$        700.00

4

Salaries expense

$    8,000.00

$ (8,000.00)

Salaries Payable

$    8,000.00

5

Revenue

$    1,000.00

$    1,000.00

Unearned Revenue

$    1,000.00

6

Supplies expense

$        150.00

$     (150.00)

Supplies

$        150.00

TOTAL

$ 10,650.00

$ 10,650.00

$ (8,650.00)

Date - July 31, 2018

General Journal

Debit ($)

Credit ($)

Net Income Increases (Decreases)

1

Depreciation expense

$        600.00

$     (600.00)

Accumulated Depreciation

$        600.00

2

Rent expenses

$        200.00

$     (200.00)

Prepaid Rent

$        200.00

3

Interest expense

$        700.00

$     (700.00)

Interest payable

$        700.00

4

Salaries expense

$    8,000.00

$ (8,000.00)

Salaries Payable

$    8,000.00

5

Revenue

$    1,000.00

$    1,000.00

Unearned Revenue

$    1,000.00

6

Supplies expense

$        150.00

$     (150.00)

Supplies

$        150.00

TOTAL

$ 10,650.00

$ 10,650.00

$ (8,650.00)