PR 3-6A Adjusting entries and errors
At the end of June, the first month of operations, the following selected data were taken from the financial statements of Beth Cato, an attorney:
| Net income for June | $80,000 |
| Total assets at June 30 | 500,000 |
| Total liabilities at June 30 | 200,000 |
| Total owner’s equity at June 30 | 300,000 |
In preparing the financial statements, adjustments for the following data were overlooked:
a. Supplies used during June, $1,500.
b. Unbilled fees earned at June 30, $18,000.
c. Depreciation of equipment for June, $3,000.
d. Accrued wages at June 30, $1,200.
Instructions
1. Journalize the entries to record the omitted adjustments.
2. Determine the correct amount of net income for June and the total assets, liabilities, and owner’s equity at June 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 | Total | Total | Total Owner’s | |
| Income | Assets = | Liabilities + | Equity | |
| Reported amounts | $80,000 | $500,000 | $200,000 | $300,000 |
| Corrections: | ||||
| Adjustment (a) | –1,500 | –1,500 | 0 | –1,500 |
| Adjustment (b) | ||||
| Adjustment (c) | ||||
| Adjustment (d) | ||||
| Corrected amounts |
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