The Downtown Company Accumulates the Following Adjustment Data at December

question 193

Essay

The Downtown Company accumulates the following adjustment data at December 31.
1. Revenue of $1,100 collected in advance has been recognized.
2. Salaries of $600 are unpaid.
3. Prepaid rent totaling $400 has expired.
4. Supplies of $550 have been used.
5. Revenue recognized but unbilled totals $750.
6. Utility expenses of $300 are unpaid.
7. Interest of $250 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 (asset/liability, 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 $22,500. What is the adjusted net income?
Prepare your answer in the tabular form presented below.

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Definitions:

Analytic Notes

Notes an ethnographer writes as a way to make sense of or interpret the raw data or descriptive notes.

Ethnographer

A researcher who studies human cultures through immersion in the environment, observation, and interviews.

Raw Data

Data collected from experiments or surveys in its original, unprocessed form.

Theory

A set of principles or explanations that accounts for observed phenomena and predicts future events.