Humana Corporation neglected to make various adjusting entries on December 31, Year 8.Indicate the effects on assets, liabilities, and shareholders' equity on December 31, Year 8 of failing to adjust for the following independent items as appropriate, using the notation O/S (overstated), U/S (understated), and No (no effect).Also, give the amount of the effect.Ignore income tax implications.Use the following format:

a. On December 15, Year 8, Humana Corporation received a $1,400 advance from a customer for products to be manufactured and delivered in January, Year 9. The firm recorded the advance by debiting Cash and crediting Sales Revenue and has made no adjusting entry as of December 31, Year 8.
b. On July 1, Year 8, Humana Corporation acquired a machine for $5,000 and recorded the acquisition by debiting Cost of Goods Sold and crediting Cash. The machine has a five-year useful life and zero estimated salvage value.
c. On November 1, Year 8, Humana Corporation received a $2,000 note receivable from a customer in settlement of an accounts receivable. It debited Notes Receivable and credited Accounts Receivable upon receipt of the note. The note is a six-month note due April 30, Year 9 and bears interest at an annual rate of 12 percent. Humana Corporation made no other entries related to this note during Year 8.
d. Humana Corporation paid its annual insurance premium of $1,200 on October 1, Year 8, the first day of the year of coverage. It debited Prepaid Insurance $900, debited Insurance Expense $300, and credited Cash for $1,200. It made no other entries related to this insurance during Year 8.
e. The Board of Directors of Humana Corporation declared a dividend of $1,500 on December 31, Year 8. The dividend will be paid on January 15, Year 9. Humana Corporation neglected to record the dividend declaration.
f. On December 1, Year 8, Humana Corporation purchased a machine on account for $50,000, debiting Machinery and crediting Accounts Payable for $50,000. Ten days later, the account was paid and the company took the allowed 2 percent discount. Cash was credited $49,000, Miscellaneous Revenue was credited $1,000, and Accounts Payable was debited $50,000. It is the policy of Humana Corporation to record cash discounts taken as a reduction in the cost of assets. On December 28, Year 8, the machine was installed for $4,000 in cash; Maintenance Expense was debited and Cash was credited for $4,000. The machine started operation on January 1, Year 9. As the machine was not placed into operation until January 1, Year 9, as appropriate, no depreciation expense was recorded for Year 8.

Question

Humana Corporation neglected to make various adjusting entries on December 31, Year 8.Indicate the effects on assets, liabilities, and shareholders' equity on December 31, Year 8 of failing to adjust for the following independent items as appropriate, using the notation O/S (overstated), U/S (understated), and No (no effect).Also, give the amount of the effect.Ignore income tax implications.Use the following format:
 
a. On December 15, Year 8, Humana Corporation received a $1,400 advance from a customer for products to be manufactured and delivered in January, Year 9. The firm recorded the advance by debiting Cash and crediting Sales Revenue and has made no adjusting entry as of December 31, Year 8.
b. On July 1, Year 8, Humana Corporation acquired a machine for $5,000 and recorded the acquisition by debiting Cost of Goods Sold and crediting Cash. The machine has a five-year useful life and zero estimated salvage value.
c. On November 1, Year 8, Humana Corporation received a $2,000 note receivable from a customer in settlement of an accounts receivable. It debited Notes Receivable and credited Accounts Receivable upon receipt of the note. The note is a six-month note due April 30, Year 9 and bears interest at an annual rate of 12 percent. Humana Corporation made no other entries related to this note during Year 8.
d. Humana Corporation paid its annual insurance premium of $1,200 on October 1, Year 8, the first day of the year of coverage. It debited Prepaid Insurance $900, debited Insurance Expense $300, and credited Cash for $1,200. It made no other entries related to this insurance during Year 8.
e. The Board of Directors of Humana Corporation declared a dividend of $1,500 on December 31, Year 8. The dividend will be paid on January 15, Year 9. Humana Corporation neglected to record the dividend declaration.
f. On December 1, Year 8, Humana Corporation purchased a machine on account for $50,000, debiting Machinery and crediting Accounts Payable for $50,000. Ten days later, the account was paid and the company took the allowed 2 percent discount. Cash was credited $49,000, Miscellaneous Revenue was credited $1,000, and Accounts Payable was debited $50,000. It is the policy of Humana Corporation to record cash discounts taken as a reduction in the cost of assets. On December 28, Year 8, the machine was installed for $4,000 in cash; Maintenance Expense was debited and Cash was credited for $4,000. The machine started operation on January 1, Year 9. As the machine was not placed into operation until January 1, Year 9, as appropriate, no depreciation expense was recorded for Year 8.

Quizplus · Accepted Answer

The Answer of Humana Corporation neglected to make various adjusting entries on December 31, Year 8.Indicate the effects on assets, liabilities, and shareholders' equity on December 31, Year 8 of failing to adjust for the following independent items as appropriate, using the notation O/S (overstated), U/S (understated), and No (no effect).Also, give the amount of the effect.Ignore income tax implications.Use the following format:
 
a. On December 15, Year 8, Humana Corporation received a $1,400 advance from a customer for products to be manufactured and delivered in January, Year 9. The firm recorded the advance by debiting Cash and crediting Sales Revenue and has made no adjusting entry as of December 31, Year 8.
b. On July 1, Year 8, Humana Corporation acquired a machine for $5,000 and recorded the acquisition by debiting Cost of Goods Sold and crediting Cash. The machine has a five-year useful life and zero estimated salvage value.
c. On November 1, Year 8, Humana Corporation received a $2,000 note receivable from a customer in settlement of an accounts receivable. It debited Notes Receivable and credited Accounts Receivable upon receipt of the note. The note is a six-month note due April 30, Year 9 and bears interest at an annual rate of 12 percent. Humana Corporation made no other entries related to this note during Year 8.
d. Humana Corporation paid its annual insurance premium of $1,200 on October 1, Year 8, the first day of the year of coverage. It debited Prepaid Insurance $900, debited Insurance Expense $300, and credited Cash for $1,200. It made no other entries related to this insurance during Year 8.
e. The Board of Directors of Humana Corporation declared a dividend of $1,500 on December 31, Year 8. The dividend will be paid on January 15, Year 9. Humana Corporation neglected to record the dividend declaration.
f. On December 1, Year 8, Humana Corporation purchased a machine on account for $50,000, debiting Machinery and crediting Accounts Payable for $50,000. Ten days later, the account was paid and the company took the allowed 2 percent discount. Cash was credited $49,000, Miscellaneous Revenue was credited $1,000, and Accounts Payable was debited $50,000. It is the policy of Humana Corporation to record cash discounts taken as a reduction in the cost of assets. On December 28, Year 8, the machine was installed for $4,000 in cash; Maintenance Expense was debited and Cash was credited for $4,000. The machine started operation on January 1, Year 9. As the machine was not placed into operation until January 1, Year 9, as appropriate, no depreciation expense was recorded for Year 8.

Humana Corporation Neglected to Make Various Adjusting Entries on December