The income statement of Annette Co, for the month of July shows net income of $2,400 based on Service Revenue $7,200, Salaries and Wages Expense $2,900 Supplies Expense $1,400, and Utilities Expense $500.In reviewing the statement, you discover the following.
1. Insurance expired during July of $600 was omitted.
2. Supplies expense includes $300 of supplies that are still on hand at July 31.
3. Depreciation on equipment of $250 was omitted.
4. Accrued but unpaid salaries and wages at July 31 of $400 were not included.
5. Services performed but unrecorded totaled $700.
Instructions
A. Prepare a correct income statement for July 2018.
B. What effect do the corrections have on the amount reported as total assets on the balance sheet?
C. What effect do the corrections have on the amount reported as total liabilities on the balance sheet?

Question

Quizplus · Accepted Answer

The Answer of The income statement of Annette Co, for the month of July shows net income of $2,400 based on Service Revenue $7,200, Salaries and Wages Expense $2,900 Supplies Expense $1,400, and Utilities Expense $500.In reviewing the statement, you discover the following.
1. Insurance expired during July of $600 was omitted.
2. Supplies expense includes $300 of supplies that are still on hand at July 31.
3. Depreciation on equipment of $250 was omitted.
4. Accrued but unpaid salaries and wages at July 31 of $400 were not included.
5. Services performed but unrecorded totaled $700.
Instructions
A. Prepare a correct income statement for July 2018.
B. What effect do the corrections have on the amount reported as total assets on the balance sheet?
C. What effect do the corrections have on the amount reported as total liabilities on the balance sheet?

The Income Statement of Annette Co, for the Month of July