Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver

Exercise 11

Journalizing adjusting entries and analyzing their effect on the income statement
The following data at January 31, 2013 is given for EBM, Inc.
a. Depreciation, $500.
b. Prepaid rent expired, $600.
c. Interest expense accrued, $300.
d. Employee salaries owed for Monday through Thursday of a five-day workweek; weekly payroll, $13,000.
e. Unearned service revenue earned, $1,300.
Requirements
1. Journalize the adjusting entries needed on January 31, 2013.
2. Suppose the adjustments made in Requirement 1 were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.