70.2K

Verified Solution

Link Copied!

An accountant made the following adjustments at December 31 , the end of the accounting period: a. Prepaid insurance, beginning, $670. Payments for insurance during the period, $2,200. Prepaid insurance, ending, $780. b. Interest revenue accrued, $700. c. Unearned service revenue, beginning, $950. Unearned service revenue, ending, $600. d. Depreciation, $6,200. e. Employees' salaries owed for three days of a five-day work week; weekly payroll, $6,500. f. Income before income tax, $21,000. Income tax rate is 25%. Requirements 1. Journalize the adjusting entries. 2. If the accountant was biased to report a better operating performance for the period than actually occurred, which of the preceding adjustments would he have not made and why? Would it have been ethical for him to do this? Requirement 1. Journalize the adjusting entries. (Record debits first, then credits. Enter explanations on the last line of the journal.) a. Prepaid insurance, beginning, $670. Payments for insurance during the period, \$2,200. Prepaid insurance, ending, $780. Journalize the adjusting entry for insurance expense. b. Interest revenue accrued, $700. Journalize the adjusting entry for the interest revenue accrued. c. Unearned service revenue, beginning, $950. Unearned service revenue, ending, $600. Journalize the adjusting entry for the unearned service revenue earned. Part 4 d.Depreciation, $6,200. Journalize the adjusting entry for depreciation. e.Employees' salaries owed for three days of a five-day work week; weekly payroll, $6,500. Journalize the adjusting entry for the employee salaries owed. Part 6 f. Income before income tax, $21,000. Income tax rate is 25%. Journalize the adjusting entry for income tax expense. Requirement 2. If the accountant was biased to report a better operating performance for the period than actually occurred, which of the preceding adjustments would he have not made and why? Would it have been ethical for him to do this? The accountant could have reported a better operating performance than actually occurred by not making the adjustments to the a.expense/b.revenue accounts, which would have resulted in and net income as follows. Select the account(s) from the list and enter the amount(s) of either the overstatement or understatement of the net income as a result of omitting these adjustments. (Use parentheses or a minus sign when It would have been a.ethical/b.unethical for the accountant to omit these adjustments because their omission results in an income statement that a.accurately reports/b.does not accurately report the company's net income for the period. By a.overstating/b.understating the company's operating performance, the accountant is a.guiding/b.intentionally misleading the users of the financial statements into thinking the company performed better than it actually did, which constitutes a.creative recordkeeping./b.fraud/c.Canadian Revenue Agency compliance

Answer & Explanation Solved by verified expert

See Answer