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The Book Company ? Adjusting entries




Question;5) The Book Company had the following adjustments at;December 31, the end of the accounting period;A. The Book;Company uses straight-line depreciation for its equipment. The amount of;depreciation to be recorded for the equipment is $10,500.;B. Accrued;interest of $2,000 on a note receivable will be received in January.;C. On;November 1, The Book Company paid for five months of rent in advance and;debited Prepaid Rent. Rent is $1,000 per month.;D. On;August 1, the company collected $24,000 in advance for a consulting contract;which is to be earned evenly over the next 12 months. The original entry;debited cash and credited unearned revenue.;E. Employees;are owed salaries for 3 days of a 5 day workweek, weekly payroll is $30,000.;F. The;unadjusted balance of the supplies account is $2,750. Based on a physical;count, the cost of supplies on hand is $1,250.;G. The;company has incurred interest expense of $850 that will be paid in January.;1. Journalize;the adjusting entries. (18 points);2. Assuming;the adjustments were not made, calculate the net overstatement or;understatement this would have on net income. Would the company appear to be;more or less profitable if the adjustments were not made? (5 points)


Paper#37568 | Written in 18-Jul-2015

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