Question

On October 1 of the current​ year, a company received $ 9 comma 600$9,600 for services...

On October 1 of the current​ year, a company received

$ 9 comma 600$9,600

for services to be performed evenly over the next six months. If no adjusting entry was made on December 31 of the current​ year:

A.net income would be understated by

$ 9 comma 600$9,600.

B.net income would be overstated by

$ 2 comma 400$2,400.

C.net income would be understated by

$ 4 comma 800$4,800.

D.net income would be overstated by

$ 4 comma 800$4,800.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution :

The Answer is (c) net income would be understated by $4,800.

Remark : On October 1, Comany has received $ 9,600 for which company must have passed the following entry :

Cash $ 9,600
Unearned Revenue $ 9,600

At the year end, comany must have booked the revenue for Oct - Dec period = $ 9,600 / 6 * 3 = $ 4,800

Since the company has not passed the adjusted entry, income would be understated by $ 4,800.

Please vote up and write your doubts in comment section. Would be glad to help you further.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. On July 1 of the current year, a company purchased equipment. The company neglects to...
1. On July 1 of the current year, a company purchased equipment. The company neglects to record the adjusting-entry for depreciation before preparing the current year’s financial statements.   Which of the following is correct regarding the company’s financial statements for the current year? a) Revenues are understated. b) Expenses are overstated. c) Assets are overstated. d) Retained earnings is understated. e) Liabilities are understated. 2. A company borrowed money from a bank by signing a three-year note payable in the...
1/ Bobby Company made payment on rent owed by erroneously increasing rent      expense and properly...
1/ Bobby Company made payment on rent owed by erroneously increasing rent      expense and properly decreasing cash. An accrual entry for rent expense had        previously been properly recorded by debiting rent expense and crediting rent             payable. Which of the following is/are true?    Net income is overstated.         B.   Prepaid rent is overstated.    Rent expense is understated.   D.   Rent payable is overstated.    All of the above are true. 2/ John Company pays four months’ rent at $800 per month...
Wildhorse Co. Trial Balance October 31, 2020 Debit Credit Cash $15,000 Supplies 2,600 Prepaid Insurance 600...
Wildhorse Co. Trial Balance October 31, 2020 Debit Credit Cash $15,000 Supplies 2,600 Prepaid Insurance 600 Equipment 4,000 Notes Payable $4,300 Accounts Payable 2,500 Unearned Service Revenue 1,000 Common Stock 10,400 Retained Earnings –0– Dividends 700 Service Revenue 10,400 Salaries and Wages Expense 4,900 Rent Expense 800 $28,600 $28,600 Assume the following adjustment data. 1. Supplies on hand at October 31 total $500. 2. Expired insurance for the month is $100. 3. Depreciation for the month is $80. 4. Services...
Chloe Company a cleaning firm, has the following account balance before adjustments on December 31, 2018...
Chloe Company a cleaning firm, has the following account balance before adjustments on December 31, 2018 Knowing that Chloe company prepares its financial statement yearly, and the $20,000 equipment was purchased on June 1, 2017 with a useful life of 4 years and $800 salvage value, the adjusted balance for accumulated depreciation on December 31, 2018 would be * $8,800 $4,800 $2,800 $7,600 Chloe Company has performed $600 of Cleaning services for a client but has not billed the client...
Violet Company borrowed $30,000 from First Federal Bank on 9/1/16. The note carried a one-year term...
Violet Company borrowed $30,000 from First Federal Bank on 9/1/16. The note carried a one-year term and a 4% interest rate. The amount of interest expense appearing on the 2017 income statement would be: 1. 1600 2. 800 3. 27,600 4. 2,400 5. None of the above The following is a random list of the accounts of Gregory Company: Cash $820 Common Stock $2,100 Accounts Payable 950 Land 1,800 Accounts Receivable 2,850 Allowance for Doubtful Accts 1,000 Prepaid Rent 750...
Q1)A Company signed a four-month note payable in the amount of $8,000 on September 1. The...
Q1)A Company signed a four-month note payable in the amount of $8,000 on September 1. The note requires interest at an annual rate of 9%. The amount of interest to be accrued at the end of December is: * 1)$240 2)$60 3)$720 4)$80 Q2))A company usually determines the amount of supplies used during a period by: * 1)Adding the supplies on hand to the balance of the Supplies account 2)Summing the amount of supplies purchased during the period 3)Taking the...
1) In 2011, Company Y has received a prepayment of $2,000 for the service to be...
1) In 2011, Company Y has received a prepayment of $2,000 for the service to be done in 2012. In 2012, Company Y has rendered the service for an amount of $1,500 but failed to record any adjusting entry. What happens to Company Y's net income in 2012? a) Net income would be overstated by $1,500. b) Net income would be overstated by $500. c) Net income would be understated by $500. d) Net income would be understated by $1,500....
1. Yellow Mango Company had the following transactions during 2016: • Sales of Php 4,500 on...
1. Yellow Mango Company had the following transactions during 2016: • Sales of Php 4,500 on account • Collected Php 2,000 for services to be performed in 2017 • Paid Php 1,625 cash in salaries • Paid Php 5,000 for insurance effective 2017. What is Yellow Mango’s 2016 net income/net loss using accrual accounting? 2. On January 1, 2016, Ms. Scarlet set up a sole proprietorship. She contributed cash of Php 1,500,000 and secured a loan of Php 220,000 ....
Multiple Choice 1) On December 15 of the current year, Conrad Accounting Services signed a $40,000...
Multiple Choice 1) On December 15 of the current year, Conrad Accounting Services signed a $40,000 contract with a client to provide bookkeeping services to the client in the following year. Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received? • Going-concern assumption. • Monetary unit assumption. • Revenue recognition principle. • Business entity assumption. • Cost principle. 2) On January 1, a company...
EXERCISES Explain the time period assumption. (LO 1) E3-1 Chloe Davis has prepared the following list...
EXERCISES Explain the time period assumption. (LO 1) E3-1 Chloe Davis has prepared the following list of statements about the time period assumption. Adjusting entries would not be necessary if a company's life were not divided into artificial time periods. The IRS requires companies to file annual tax returns. Accountants divide the economic life of a business into artificial time periods, but each transaction affects only one of these periods. Accounting time periods are generally a month, a quarter, or...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT