Reference no: EM132090307
Question: Analyzing the Effects of Adjusting Journal Entries on the Income Statement and Balance Sheet On December 31, 2009, Laura's Pie Company, owned by Laura Anne, prepared an income statement and balance sheet, but the bookkeeper accidentally failed to take into account four adjusting journal entries. The income statement, prepared on this incorrect basis, reported income of $30,000. The balance sheet reflected total assets, $90,000; total liabilities, $40,000; and owner's equity, $50,000. The data for the four adjusting journal entries follow:
a. Depreciation of $8,000 for the year on equipment was not recorded.
b. Wages amounting to $17,000 for the last three days of December 2009 were not paid and not recorded (the next payroll will be on January 10, 2010).
c. Rent revenue of $4,800 was collected on December 1, 2009, for office space for the three month period December 1, 2009, to February 28, 2010. The $4,800 was credited in full to Unearned Rent Revenue when collected.
d. The company borrowed $10,000 from a local bank on January 1, 2009. The note principal is due in three years but requires payment of $1,500 interest every January 1 with the next payment due on January 1, 2010. No interest has been paid or recorded for 2009.
Required: Complete the following table to show the effects of the four adjusting journal entries (indicate deductions with parentheses):
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