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The XYZ Company had the following adjustments at December 31, 2019, the end of the accounting period:

1. The XYZ Company uses straight-line depreciation for its equipment. The cost of the equipment is $105,000 the useful life is 5 years. The equipment was purchased on January 1, 2019 and has no residual value.
2. Accrued interest of $10,000 on a note receivable will be received in January.
3. On November 1, 2019, the XYZ Company paid $3,000 for six months of rent in advance. The rental period November 1, 2019 through April 30, 2020.
4. On August 1, 2019, the company collected $24,000 in advance for a consulting contract, which is to be earned evenly over the next 24 months.
5. Employees are owed salaries for 3 days of a 5 day workweek; weekly payroll is $30,000.
6. The unadjusted balance of the supplies account is $2,750. Based on a physical count, the cost of supplies on h $1,000.
7. The company has incurred interest expense of $1,000 that will be paid in January.

Required: a). Journalize the adjusting entries. Explanations are not required. Remember: Do not make the above regular journal entries. These have already been completed. You are to make the adjusting entries only on December 31, 2019 (7 pts)

Transaction	Account Name	Debit	Credit

b) Assuming the adjustments were not made, calculate the net overstatement or understatement this would have net income. Would the company appear to be more or less profitable if the adjustments were not made? Show the amount of understatement or overstatement and how you arrived at that number. (1POINT)

2) The Accumulated Depreciation account: (1 pt)

1. has a normal balance which is the same as its companion account.
2. is another term for depreciation expense.
3. is a contra asset account.
4. represents the original cost of a plant asset.

3) Under accrual accounting, revenue is recorded: (1 pt)

1. at the end of every month.
2. only if the cash is received at the same time the services are performed.
3. when the cash is received, regardless of when the services are performed.
4. when the services are performed, regardless of when the cash is received.

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