Mattox Corporation had a unadjusted balance of $5,400 in Supplies.The actual balance was $150.The accountant failed to make the adjusting entry.What is the effect on the current year financial statements?
A)Net income is understated by $5,250.
B)Current assets are overstated by $5,250.
C)Current assets are understated by $5,400.
D)Retained Earnings is overstated by $5,400.

Question

Quizplus · Accepted Answer

The failure to adjust the Supplies account means that the current assets are overstated by the difference between the unadjusted balance and the actual balance, which is $5,250 ($5,400 - $150).

Mattox Corporation Had a Unadjusted Balance of $5,400 in Supplies