accounting basics Essay

Submitted By gusmuller
Words: 438
Pages: 2

Q1 and Q2 – Adjustments and Financial statements Balance sheet for Stoscheck before and after adjustments; Income statement for Stoscheck before and after adjustments; Six adjustments for Stoscheck;
Journal entries for Stoscheck. Assumption: The loan would be recorded as additional cash

Stoscheck Moving Corp.
Income Statement
At December 31, 2012 original Corrected
Transportation revenue $ 85,000 100.0% $ 78,000 100.0%
Expenses
Salaries expenses $ 17,000 36.2% $ 20,200 31.9%
Supplies expense $ 12,000 25.5% $ 14,200 22.4%
Depreciation expense $ - 0.0% $ 8,000 12.6%
Other expense $ 18,000 38.3% $ 21,000 33.1%
Total expenses $ 47,000 100.0% $ 63,400 100.0%
Income before tax deduction $ 38,000 $ 14,600
Income Tax Exp. $ - 0.0% $ 5,110
Net income after tax deductions $ 38,000 $ 9,490

Stoscheck Moving Corp.
Adjustments
Item Amount reported Changes Corrected Amount Debit Credit
Supplies $ 4,000 $ 2,200 $ 1,800
Supplies expense $ 12,000 $ 2,200 $ 14,200 prepaid insurance $ 6,000 $ 3,000 $ 3,000 other expense $ 18,000 $ 3,000 $ 21,000
Equipment $ 40,000 $ 8,000 $ 32,000
Depreciation expense $ - $ 8,000 $ 8,000
Salaries expense $ 17,000 $ 3,200 $ 20,200 unpaid salaries $ - $ 3,200 $ 3,200 pre-paid revenues $ - $ 7,000 $ 7,000 transportation revenues $ 75,000 $ 7,000 $ 68,000
Income tax $ - $ 5,110 $ 5,110

Stoscheck moving corp
Journal Entries
Item Description Debit Credit
A Supplies (-A) $ 2,200 Supplies expense(+E,-SE) $ 2,200
B Prepaid insurance (-A) $ 3,000 Other expenses (+E,-SE) $ 3,000
C Equipment depreciation (-A) $ 8,000 Depreciation Expense (+E,-SE) $ 8,000
D unpaid salaries(+L) $ 3,200 Salaries expense(+E,-SE) $ 3,200
E Pre-paid revenues (+L) $ 7,000 Transportation revenue(-SE) $ 7,000
F Income tax (+E) $ 5,110 Retained earnings(-SE) $ 5,110

Q3 – Omissions of the adjusting entries caused:
a. Net income to be OVERSTADED by $28,510.00
b. Total Assets on the balance sheet to be OVERSTADED by $13,200.00
c. The total liabilities on the balance sheet to be…