Question

At the end of August, the first month of operations, the following selected data were taken from the financial statements of Tucker Jacobs, an attorney:Net income for August$112,500Total assets at August 31650,000Total liabilities at August 31225,000Total stockholders' equity at August 31425,000In preparing the financial statements, adjustments for the following data were overlooked:1. Unbilled fees earned at August 31, $31,900.2. Depreciation of equipment for August, $7,500.3. Accrued wages at August 31, $5,200.4. Supplies used during August, $3,000.Instructions1. Journalize the entries to record the omitted adjustments.2. Determine the correct amount of net income for August and the total assets, liabilities, and stockholders' equity at August 31.

Answer 1

Answer:

1. See the journal below.

2. Correct answers are:

a. Correct amount of net income = $ 128,700.

b. Correct amount of total assets = $671,400.

c. Correct amount of total liabilities = $230,200.

d. Correct amount of stockholders' equity = $441,200

Explanation:

1. Journalize the entries to record the omitted adjustments

Details                                   Dr ($)               Cr ($)          

Accounts Receivable         31,900

Unbilled fees earned                                   31,900

To record the unbillled fees earned.                                         Depreciation                          7,500  

Accumulated Depreciation                             7,500

To record the depreciation expenses.                                      

Wages Expense                     5,200

Wages Payable                                                 5,200

To record accrued wages expense.                                            

Supplies Expense                  3,000

Supplies                                                             3,000

To record the supplies expenses.                                            

2. Determine the correct amount of net income for August and the total assets, liabilities, and stockholders' equity at August 31.

a. Correct amount of net income = Net income recorded + Unbilled fees earned - Depreciation - Accrued wages - supplies expense = $112,500 + $31,900 - $7,500 - $5,200 - $3,000 = $ 128,700.

b. Correct amount of total assets = Recorded total assets + Unbilled fees earned - depreciation - Supplies = $650,000 + 31,900 - $7,500 - $3,000 = $671,400.

c. Correct amount of total liabilities = Recorded total liabilities + Accrued wages = $225,000 + 5,200 = $230,200.

d. Correct amount of stockholders' equity = Correct amount of total assets - Correct amount of total liabilities = $671,400 - $230,200 = $441,200