Each of the Following Transactions for Morrison Company Requires an Adjusting

question 167

Essay

Each of the following transactions for Morrison Company requires an adjusting entry,which if omitted,will overstate or understate assets,liabilities,stockholders' equity,revenues,expenses,or net income.Indicate the amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the transaction was omitted.Place your results in the table following the transactions and use (+)for overstate, (-)for understate,and (NE)for no effect.
1.Morrison purchased supplies on December 1 for $900.On December 31,$350 of supplies were on hand.
2.Prepaid insurance had a debit balance of $5,400 on December 1,which represented a prepayment for 2 years of insurance.
3.The unearned rent revenue account has a credit balance of $390 on December 1,which represents 3 months rent.

---

Definitions:

Disaggregate

To break down into smaller components or elements for analysis or examination.

Financial Statement

A written report that quantitatively describes the financial health of a company, including balance sheets, income statements, and cash flow statements.

Reportable Segment

Part of a company that can be clearly distinguished operationally and financially from other parts of the company, requiring separate reporting under certain financial reporting frameworks.

Financial Report

A formal record containing financial information of an entity, including statements of financial position, performance, changes in equity, and cash flow, for a specific period.