For the Year Ending December 31, 2010, Nathan Clinical Supplies

question 73

Essay

For the year ending December 31, 2010, Nathan Clinical Supplies Co. mistakenly omitted adjusting entries for (1) $8,900 of unearned revenue that was earned, (2) earned revenue that was not billed of $10,200, and (3) accrued wages of $7,000. Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for 2010.

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Definitions:

Nonconforming Goods

Products shipped to a buyer that do not meet the specifications or quality standards agreed upon in the contract.

Merchant Seller

A business or individual that sells goods to consumers in the course of their trade or business.

Nonmerchant Buyer

An individual or entity that purchases goods but does not regularly deal in goods of that kind, thus lacking certain protections and obligations under commercial law.