Reference no: EM132479072
Canvas Homework: What happens when you don't record Adjusting Journal Entries?
Idle Bay, Inc forgot to record the following adjusting entries for the year ended December 31, 2018.
1) They didn't recognize $10,000 in earned revenue that had been paid in advance from customers. It was correctly recorded as Unearned Revenue when the cash was received.
2) They didn't adjust for $2,000 in office supplies used during the year.
3) They didn't accrue $7,000 in unpaid salary expense that had been incurred as of year-end.
4) They didn't record for $6,000 in services performed for a customer that will be paying in January 2019.
For each omitted transaction, answer the following questions:
Question a) What Adjusting Journal Entry (AJE) should have been recorded at 12/31/2018?
Question b) How will omitting this AJE affect Idle Bay's (i) Revenues, (ii) Expenses, (iii) Net Income, (iv) Assets, (v) Liabilities, and (vi) Retained Earnings on the 2018 financial statements? (overstated, understated, or not affected)
Question c) Will the Balance Sheet be unbalanced as a result of this omission?
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