The Schauer Company Had the Following Adjustments at December 31,2019,the

question 29

Essay

The Schauer Company had the following adjustments at December 31,2019,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.The equipment was purchased on January 1,2019 and has no residual value.
B.Accrued interest of $10,000 on a note receivable will be received in January.
C.On November 1,2019,the Schauer Company paid $3,000 for six months of rent in advance.The rental period is November 1,2019 through April 30,2020.
D.On August 1,2019,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.
Required:
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:

Perform Expectedly

Achieving or accomplishing tasks, duties, or roles in a manner that meets established standards or predictions.

Weber's Bureaucratic Model

A conceptual model outlining the characteristics of a highly structured, formalized, and impersonal form of organization, theorized by Max Weber.

Self-actualization

The accomplishment or realization of an individual's capabilities and potential, regarded as an essential drive or need in all human beings.

Psychological Failure

A condition where an individual fails to achieve a desired psychological state or outcome, often related to mental health, emotional well-being, or cognitive functions.