Question

Analysis of the Impact of Adjustments on Financial Statements At the end of the first month of operations, the Stephan Company’s accountant prepared financial statements that showed the following amounts: Assets $60,000 Liabilities 20,000 Stockholders' Equity 40,000 Net Income 9,000 In preparing the statements, the accountant overlooked the following items: a. Depreciation for the month. $925 b. Service revenue earned but unbilled at month-end. 1,500 c. Employee wages earned but unpaid at month-end. 410 Determine the correct amounts of assets, liabilities and stockholders' equity at month-end and net income for the month. Assets Liabilities Stockholders' Equity Net Income Answer Answer Answer Answer

Answer 1

Answer:

Explanation:

The correct amounts are shown below:

1. Assets =  Asset balance - depreciation + service revenue

               = $60,000 - $925 +  $1,500

               =  $60,575

2. Liabilities = Liabilities balance + employees wages earned

                    = $20,000 + $410

                    = $20,410

3.  Stockholders' Equity = Equity balance - depreciation + service revenue - employees wages earned

                                        = $40,000 - $925 + $1,500 - $410

                                        = $40,165

4.  Net Income = Net income balance - depreciation + service revenue - employees wages

                        = $9,000 - $925 + $1,500 - $410

                        = $9,165