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Financial Adjustments and Corrections

The document summarizes adjusting entries made for various accounts for the years 2018 and 2019. It records entries for accrued salaries, inventory valuation, interest receivable, prepaid insurance, gain on sale of equipment, depreciation expense, accounts receivable, accounts payable, and sales. The entries were made to properly record transactions and adjust account balances, and affected balance sheet and income statement items such as operating expenses, cost of sales, net income, and retained earnings.

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Qwerty Uiop
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60 views12 pages

Financial Adjustments and Corrections

The document summarizes adjusting entries made for various accounts for the years 2018 and 2019. It records entries for accrued salaries, inventory valuation, interest receivable, prepaid insurance, gain on sale of equipment, depreciation expense, accounts receivable, accounts payable, and sales. The entries were made to properly record transactions and adjust account balances, and affected balance sheet and income statement items such as operating expenses, cost of sales, net income, and retained earnings.

Uploaded by

Qwerty Uiop
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

2018 2019

UNADJUSTED NI 1,750,000.00 2,000,000.00


ACCRUED SALARES
2018 - 100,000.00 100,000.00
2019 - 140,000.00
INVENTORY - 190,000.00 190,000.00
INT. RECEIVABLE 20,000.00
PREPAID INSURANCE 120,000.00
SALE OF EQUIPMENT - 120,000.00
ADJUSTED NI 1,460,000.00 2,170,000.00

EM
CASH 220,000.00
MISC. INC. 220,000.00
#
DEP'R EXPENSE 40,000.00
ACCUM. DEPR 40,000.00

SE
CASH 220,000.00
ACCUM. DEPR 240,000.00
EQUIPMENT 400,000.00
GAIN ON SALE 60,000.00

CORRECTING ENTRY
BOOKS ARE OPEN

MISC. INC. 220,000.00


ACCUM. DEPR 280,000.00
DEP'R EXPENSE 40,000.00
EQUIPMENT 400,000.00
GAIN ON SALE 60,000.00
BOOKS ARE CLOSED
OPEX overstated 40,000.00 NI-UNDER
OI overstated 160,000.00 NI-OVER
NI net overstated 120,000.00
RE net overstated 120,000.00
EQUIP overstated 400,000.00
AD overstated 280,000.00

ACCUM. DEP 280,000.00


RE 120,000.00
EQUIPMENT 400,000.00
2018 2019
EM: NO ENTRY TO RECORD THE PAYMENT OF SALARIES
SE: EM: SALARIES EXPENSE
SALARIES EXPENSE
SALARIES PAYABLE SE:
EFFECTS: SALARIES PAYABLE
OPEX understated
NI overstated EFFECTS:
LIAB understated OPEX overstated
RE 100,000 over NI understated
OMISSION OF ACCRUED WAGES
EM: NO ENTRY
SE:
SALARIES EXPENSE
SALARIES PAYABLE
EFFECTS:
OPEX understated
NI overstated

CORRECTING ENTRY
BOOKS ARE CLOSED
RE 140,000.00
SALARIES PAYABLE
BOOKS ARE OPEN
SALARIES EXPENSE
SALARIES PAYABLE

2018 2019
INV -END -OVERSTATED INV - BEG - OVER
COS UNDER COS OVER
NI OVER NI UNDER
RE OVER RE UNDER

EM: NO ENTRY
SE: INT. RECEIVABLE
INTEREST INCOME

CORRECTING ENTRY

BOOKS ARE CLOSED


INT. RECEIVABLE
RE

ADJ NO ENTRY

SAJE PREPAID INSURANCE


INSURANCE EXPENS
OPEX-OVER
CORRECTING ENTRY NI-UNDER
BOOKS ARE CLOSED RE -UNDER
PREPAID INSURANCE
RE
2019

100,000.00
CASH 100,000.00

100,000.00
CASH 100,000.00

LIAB zero
RE 100,000 under

140,000.00
140,000.00

LIAB understated
RE overstated

140,000.00
S PAYABLE 140,000.00

140,000.00
140,000.00

2019
ASSET-UNDER
EREST INCOME OI -UNDER
NI -UNDER
RE -UNDER

ID INSURANCE
SURANCE EXPENSE
ASSET UNDER

ID INSURANCE
2018 2019
UNADJUSTED NI 3,000,000.00 4,000,000.00
INVENTORIES
2018 20,000.00 - 20,000.00
2019 - 18,000.00
DEPRECIATION - 4,000.00
INSURANCE 10,000.00 - 5,000.00
GAIN 32,000.00

ADJUSTED NI 3,026,000.00 3,989,000.00

opex over
1/1/2018 re under
IE 15,000.00
CASH 15,000.00

12/31/18
AJE PI 10,000.00
IE 10,000.00

EM NO AJE

EFFECTS:
IE-OVER
PI-UNDER
NI -UNDER
2019
EM NO ENTRY

SE/AJE
CASH 32,000.00
ACCUM. DEPR 200,000.00
MANCHINE 200,000.00
GAIN ON SALE 32,000.00
asset under

INSURANCE 5,000.00
PREPAID 5,000.00
RE 10,000.00
2018 2019
UNADJUSTED NI 4,000,000.00 5,000,000.00
PURCAHSES - 160,000.00
DEPRECIATION - 90,000.00 300,000.00
SALES 300,000.00

ADJUSTED NI 3,910,000.00 5,440,000.00

2019
EM NO ENRTY
SE CASH
AR
AJE CASH
AR

EM NO ENRTY
SE PURCHASES
AP
AJE PURCHASES
PURCHASES
EFFECTS
COS UNDER
NI OVER

2018
OPEX UNDER
NI OVER
RE OVER
ACCU. DEP UNDER
AJE:
RE
ACUM. DEP'R
EM PURCHASES
CASH/AP

SE SUPPLIES EXPENSE
CASH/AP

AJE SUPPLIES EXPENSE


PURCHASES
EFFECTS
PURCHASES OVER OPEX UNDER
COS OVER NI OVER
NI UNDER NO EFFECT

EM NO ENTRY

SE AR
SALES

AJE AR
SALES
EFFECTS
SALES UNDER
NI UNDER

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