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Using the Balance Day Adjustment journals below as an example, identify and explain the potential impacts...

  • Using the Balance Day Adjustment journals below as an example, identify and explain the potential impacts on the Income Statement and Balance Sheet if these two Balance Day Adjustment journals are not posted/ processed. You must conclude what overstatement or understatement would result in both the Income Statement and Balance Sheet.

30 June 2020    (dr) Rent Revenue                 $5,580

                                                      (cr)  Unearned Rent Revenue     $5,580

(to record the unearned rent revenue)

30 June 2020      (dr) Insurance Expense      $990

                                             (cr) Prepaid Insurance         $990

                           (to record the prepaid insurance expired for  June )                                                          

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