Wham Company Accumulates the Following Adjustment Data at December 31

question 258

Essay

Wham Company accumulates the following adjustment data at December 31.
1. Revenue of $800 collected in advance has been earned.
2. Salaries of $600 are unpaid.
3. Prepaid rent totaling $450 has expired.
4. Supplies of $550 have been used.
5. Revenue earned but unbilled total $750.
6. Utility expenses of $400 are unpaid.
7. Interest of $150 has accrued on a note payable.
Instructions
(a) For each of the above items indicate:
1. The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense).
2. The account relationship (expense/asset, liability/revenue, etc.).
3. The status of account balances before adjustment (understatement or overstatement).
4. The adjusting entry.
(b) Assume net income before the adjustments listed above was $12,500. What is the adjusted net income?
Prepare your answer in the tabular form presented below.

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Definitions:

Thick Fur

A dense layer of hair on animals that serves as insulation against cold temperatures and water.

Permafrost

A thick subsurface layer of soil that remains frozen throughout the year, occurring chiefly in polar regions.

Arctic Tundra

A cold, treeless region where the subsoil is permanently frozen, found in the Arctic circle.

Coniferous Forest

A biogeographic zone dominated by cone-bearing trees, such as pines, spruces, and firs, typically found in northern latitudes where temperatures can be cold.