E3-33B. (Learning Objectives 1, 3: Journalizing adjusting entries and analyzing their effects on net income; comparing accrual and cash basis) An accountant made the following adjustments at December 31, the end of the accounting period:

a. Prepaid insurance, beginning, €800. Payments for insurance during the period, €2,500.

Prepaid insurance, ending, €1,400.

b. Interest revenue accrued, €1,200.

c. Unearned service revenue, beginning, €1,500. Unearned service revenue, ending, €600.

d. Depreciation, €4,700.

e. Employees’ salaries owed for three days of a five-day work week; weekly payroll,

€24,000.

f. Income before income tax, €21,000. Income tax rate is 25%.

Requirements 1. Journalize the adjusting entries.

2. Suppose the adjustments were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.