Adjusting entries and errors
At the end of April, the first month of operations, the following selected data were taken from the financial statements of Shelby Crawford, an attorney:
| Net income for April | $120,000 |
| Total assets at April 30 | 750,000 |
| Total liabilities at April 30 | 300,000 |
| Total stockholders’ equity at April 30 | 450,000 |
In preparing the financial statements, adjustments for the following data were overlooked:
1. Supplies used during April, $2,750.
2. Unbilled fees earned at April 30, $23,700.
3. Depreciation of equipment for April, $1,800.
4. Accrued wages at April 30, $1,400.
Instructions
1. Journalize the entries to record the omitted adjustments.
2. Determine the correct amount of net income for April and the total assets, liabilities, and stockholders’ equity at April 30. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. Adjustment (a) is presented as an example.
| Net Income | Total Assets | = | Total Liabilities | + | Total Stockholders’ Equity | |
| Reported amounts | $120,000 | $750,000 | $300,000 | $450,000 | ||
| Corrections: | ||||||
| Adjustment (a) | -2,750 | -2,750 | -2,750 | |||
| Adjustment (b) | ____ | ____ | ____ | ____ | ||
| Adjustment (c) | ____ | ____ | ____ | ____ | ||
| Adjustment (d) | ____ | ____ | ____ | ____ | ||
| Corrected amounts | ____ | ____ | ____ | ____ |
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