Ogon quit Enterprises prepares annual financial statements and adjusts its accounts only at the end of the year. The following information is available for the year ended December 31, 2012:

a. Ogon quit purchased office furniture last year for $25,000. The furniture has an estimated useful life of seven years and an estimated salvage value of $4,000.

b. The Supplies account had a balance of $1,200 on January 1, 2012. During 2012, Ogon quit added $12,900 to the account for purchases of supplies during the year. A count of the supplies on hand at the end of December 2012 indicates a balance of $900.

c. On July 1, 2012, Ogon quit created a liability account, Customer Deposits, for $8,800. This sum represents an amount that a customer paid in advance and that will be earned evenly by Ogon quit over an eight-month period.

d. Ogon quit rented some warehouse space on September 1, 2012, at a rate of $4,000 per month. On that date, Ogon quit recorded Prepaid Rent for six months' rent paid in advance.

e. Ogon quit took out a 90-day, 6%, $30,000 note on November 1, 2012, with interest and principal to be paid at maturity.

f. Ogon quit operates five days per week with an average weekly payroll of $4,150. Ogonquit pays its employees every Thursday. December 31, 2012, is a Monday.

Required

1. For each of the preceding situations, identify and analyze the adjustment necessary on December 31, 2012.

2. Assume that Ogon quit's accountant forgets to record the adjustments on December 31, 2012. Will net income for the year be understated or overstated? by what amount? (Ignore the effect of income taxes.)