On December 31, a business estimates depreciation on equipment used during the first year of operations to be $2,900 . (a) Journalize the adjusting entry required on December 31 . (b) If the adjusting entry in (a) were omitted, which items would be erroneously stated on (1) the income statement for the year and (2) the balance sheet as of December 31?
(a) Depreciation Expense 2,900
Accumulated Depreciation-Equipment 2,900
(b) (1) Depreciation expense would be understated. Net income
would be overstated.
(2) Accumulated depreciation would be understated, and
total assets would be overstated. Shareholders' equity
would be overstated.
You might also like to view...
Deena, a human resource professional, works for a U.S. company that is opening an office in Brazil. She is preparing a training program for the managers there to learn how to carry out performance management. What is a valid point Deena should cover in the training?
A. In delivering feedback, managers should meet Brazilian cultural standards for bowing and making eye contact. B. If growth slows, the company may have to update its performance plans more often. C. If managers are concerned about bad karma, they do not have to give employees feedback. D. Managers should review employees' shortcomings before giving praise. E. Managers can expect that Brazilian employees want to know what they are doing right.
Which method assigns the cost of the most recent items purchased to cost of goods sold?
a. Specific identification b. Weighted average cost c. FIFO d. LIFO
When customers don't know what they want or don't even know what's possible, the most effective marketing strategy is ________ marketing
A) customer-driven B) customer-driving C) societal D) ambush E) affinity
Upon graduating from college, Kathy announced her plans to enter law school the following fall and to marry Rick in December. Kathy's father was afraid that marriage during her first year in law school might cause her to fall behind in her studies or cause her to drop out of school. He called Kathy and promised her $10,000 if she postponed her wedding until after completion of her first year of
law school. Kathy agreed and postponed the wedding for a year. Kathy successfully completed her first year of law school, but soon thereafter, Kathy's father died. The administrator of her father's estate claimed she was not entitled to the $10,000 because there was no consideration for her father's promise. If Kathy sues the estate, she will probably be a. unsuccessful because her father's death terminated the contract. b. successful, as there was consideration. c. unsuccessful because her father received no benefit. d. unsuccessful because it was merely fatherly advice not to get married during the first year of law school.