Question

Windsor, Inc. earned $1720 for architecture services provided with the fee to be paid in the future. No entry was made at the time the service was provided. If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause:

Answer 1

Answer:

1. Current Assets would be understated by $1,720 .

2.Net income for the period will be understated by $1,720.

Explanation:

When the service is performed, the following entry has to be made :

Account Receivable $1,720 (debit)

Service Revenue $1,720 (credit)

Thus if the no adjusting entry has been made the following will happen :

1. Current Assets would be understated.

2.Net income for the period will be understated.