Adjusting Entries-Effect on Elements of Financial Statements $\quad$ $\quad$

question 72

Essay

Adjusting entries-effect on elements of financial statements.
Whoop-It-Up Limited 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, Limited for March from the concessionaire operating a juice bar in the facility. The amount due will be remitted to Whoop-It-Up, Limited 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, profit, assets, liabilities, and 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.
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Income Statement }$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Balance Sheet }$
$\begin{array} { | c | l | l | l | l | l | l | } \hline \text { Adjusting } & \text { Revenue } & \text { Eanenses } & \text { Profit } & \text { Assets } & \text { Iabilities } & \text { Eqquity } \\\hline \text { Entry } & & & & & & \\\hline \text { (a.) } & & & & & & \\\hline \text { (b.) } & & & & & & \\\hline \text { (c.) } & & & & & & \\\hline \text { (d.) } & & & & & & \\\hline \text { (e.) } & & & & & & \\\hline & & & & & & \\\hline\end{array}$

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Definitions:

Optic Nerve

A cranial nerve that transmits visual information from the retina to the brain.

Retina

The light-sensitive layer of tissue at the back of the inner eye that converts light images to electrical signals sent to the brain.

Fovea

The fovea is a small depression in the retina of the eye where visual acuity is highest due to the concentration of cones, which are responsible for color vision.

Blind Spot

The area in the human visual field that lacks light-detecting photoreceptor cells, resulting from the optic nerve head's location on the retina.