The Schauer Company Had the Following Adjustments at December 31,2015,the

question 96

Essay

The Schauer Company had the following adjustments at December 31,2015,the end of the accounting period:
A.The Schauer Company uses straight-line depreciation for its equipment.The cost of the equipment is $105,000 and the useful life is 5 years.
B.Accrued interest of $10,000 on a note receivable will be received in January.
C.On November 1,2015,the Schauer Company paid $3,000 for six months of rent in advance.The rental period is November 1,2015 through April 30,2016.
D.On August 1,2015,the company collected $24,000 in advance for a consulting contract,which is to be earned evenly over the next 24 months.
E.Employees are owed salaries for 3 days of a 5 day workweek; weekly payroll is $30,000.
F.The unadjusted balance of the supplies account is $2,750.Based on a physical count,the cost of supplies on hand is $1,000.
G.The company has incurred interest expense of $1,000 that will be paid in January.
Requirements:
1.Journalize the adjusting entries.Explanations are not required.
2.Assuming the adjustments were not made,calculate the net overstatement or understatement this would have on net income.Would the company appear to be more or less profitable if the adjustments were not made?

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Definitions:

Management By Objectives (MBO)

A management model that focuses on setting clear, measurable goals agreed upon by both management and employees, with progress evaluated periodically.

Reviewing Performance

The process of formally assessing an individual's job performance over a given period, typically to inform decisions on promotions, pay raises, and developmental needs.

Performance Objectives

Specific goals set for employees or teams to achieve, used to evaluate their effectiveness and productivity.

Good Time Management

The effective planning and controlling of one's time to efficiently accomplish tasks and objectives, optimizing productivity.