An accountant made the following adjustments at December 31, the end of the accounting period:
a. Prepaid insurance, beginning, $700. Payments for insurance during the period, $2,100. Prepaid insurance, ending, $800.
b. Interest revenue accrued, $900.
c. Unearned service revenue, beginning, $800. Unearned service revenue, ending $300
d. Depreciation, $6,200.
e. Employees’ salaries owed for three days of a five day work week; weekly payroll, $9,000.
f. Income before income tax, $20,000. Income tax rate is $25%.
Requirements
1. Journalize the adjusting entries.
2. Suppose the adjustments were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.
Thanks