On December 31, 2014, the bookkeeper for Grillo Company prepared the following income statement and balance sheet summarized here but neglected to consider three adjusting entries.
As Effects of Corrected
Prepared Adjusting Entries Amounts
Income Statement
Revenues $ 97,000
Expenses (73,000)
Income tax expense
Net income $ 24,000
Balance Sheet
Assets
Cash $ 20,000
Accounts receivable 22,000
Rent receivable Equipment 50,000
Accumulated depreciation (10,000)
$ 82,000
Liabilities
Accounts payable $ 10,000
Income taxes payable
Stockholders' Equity
Common stock 10,000
Additional paid-in capital 30,000
Retained earnings 32,000
$ 82,000
Data on the three adjusting entries follow:
a. Rent revenue of $2,500 earned for December 2014 was neither collected nor recorded.
b. Depreciation of $4,500 on the equipment for 2014 was not recorded.
c. Income tax expense of $5,100 for 2014 was neither paid nor recorded.
Required:
1. Prepare the three adjusting entries that were omitted. Use the account titles shown in the income statement and balance sheet data.
2. Complete the two columns to the right in the preceding tabulation to show the correct amounts on the income statement and balancesheet.
Answers: 3
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On December 31, 2014, the bookkeeper for Grillo Company prepared the following income statement and...
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