Adjusting Entries-Effect on Elements of Financial Statements
Whoop-It-Up, Inc

question 92

Essay

Adjusting entries-effect on elements of financial statements
Whoop-It-Up, Inc. prepares monthly financial statements. On March 31, the company's accountant made adjusting entries to record:
(A) Depreciation for the month of March.
(B) Amount owed to Whoop-It-Up, Inc for March from the concessionaire operating a juice bar in the facility. The amount due will be remitted to Whoop-It-Up, Inc during the first week in April.
(C) Cost of supplies used in March. (When purchased, the cost of supplies is debited to an asset account.)
(D) Earning of a portion of annual membership fees which had been collected in advance. (When customers purchase annual memberships, an Unearned Revenue account is credited.)
(E) Accrued interest for March owed on a bank loan obtained March 1. No interest expense has yet been recorded.
Indicate the effect of each of these adjusting entries on the major elements of the company's financial statements-that is, on revenue, expenses, net income, assets, liabilities, and owner's equity. Organize your answer in tabular form, using the column headings shown below and the symbols + for increase, - for decrease, and NE for no effect.
$$\begin{array} { | c | c | c | c | c | c | c | } \hline & { \text { Income Statement } } &&&{ \text { Balance Sheet } } \\\hline \text { Adjusting } & \text { Revenue } & \text { Expenses } & \text { Net } & \text { Assets } & \text { Liabilities } & \text { Owners' } \\\hline \text { Entry } & & & \text { Income } & & & \text { Equity } \\\hline \text { (a.) } & & & & & & \\\hline \text { (b.) } & & & & & & \\\hline \text { (c.) } & & & & & & \\\hline \text { (d.) } & & & & & & \\\hline \text { (e.) } & & & & & & \\\hline & & & & & & \\\hline\end{array}$$

---

Definitions:

Damages

Compensation claimed by or awarded to a party for loss or injury suffered due to another's actions or negligence.

Proving Fraud

The process of establishing the intentional deception made by one party in order to gain an unfair advantage over another, which often involves legal proceedings.

Innocent Party

An individual or entity that is not at fault or involved in wrongdoing, especially in a legal context.

Fraud

A wrongful or criminal deception intended to result in financial or personal gain.