A Company Issued Financial Statements for the Year Ended December

question 11

Essay

A company issued financial statements for the year ended December 31, but failed to include the following adjusting entries:
A. Accrued interest revenue earned of $1,200.
B. Depreciation expense of $4,000.
C. Portion of prepaid insurance expired (an asset) used $1,100.
D. Accrued taxes of $3,200.
E. Revenues of $5,200, originally recorded as unearned, have been earned by the end of the year. Determine the correct amounts for the December 31 financial statements by completing the following table:
$\begin{array} { | l c c c c | } \hline & \text { Assets } & \text { Liabilities } & \text { Equity } & \text { Net Income } \\\hline \begin{array} { l } \text { Reported } \\\text { amounts }\end{array} & \$ 350,000 & \$ 200,000 & \$ 150,000 & \$ 70,000 \\\hline \begin{array} { l } \text { Add (subtract) to } \\\text { correct for item: }\end{array} & & & & \\\hline\end{array}$

Know the appropriate actions for adjusting the Cash account when bank errors are identified.

Distinguish between recorded and unrecorded charges in bank reconciliations.

Grasp the correct procedures for recording various transactions in QBO, including bank deposits and expenses.

Recognize bank reconciliations as an effective internal control mechanism.

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Definitions:

Income Redistribution

A policy or process aimed at adjusting the distribution of income among a population to reduce inequality.

Economics

The social science concerned with the production, distribution, and consumption of goods and services, and the analysis of the choices people make to satisfy their needs.

Scarcity

The fundamental economic problem of having seemingly limitless human wants in a world with limited resources.

Government Intervention

Actions taken by a government to influence or regulate economic activities, often to correct market failures or achieve social goals.