Wham Company Accumulates the Following Adjustment Data at December 31

question 103

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:

Magnet Wire

A type of insulated electrical wire typically made of copper or aluminum, used in making coils or windings in electrical components.

Insulation

Materials used to electrically isolate conductors or components, preventing unwanted current flow and ensuring safety.

Induction Motors

Electric motors that operate by inducing a rotating magnetic field in a conductive rotor, without physical contact, typically used in industrial applications.

Rotors

The rotating part of an electrical machine such as a motor or generator, which turns around an axis.