During the current accounting period, the bookkeeper for the Nallen Company made the following errors in the year-end adjustments:  lop74

3. Inadvertently recorded $300 of annual depreciation twice for the same equipment 4. Failed to record $100 of interest revenue that had accrued during the period 5. Failed to reduce unearned revenues for $600 of revenues that were earned during the period Required: Assuming that the errors are not discovered, indicate the effect of each error on revenues, expenses, net income, assets, liabilities, and owner's equity at the end of the accounting period. Use the following code: O =" Overstated, U = Understated, and N = No effect. Include dollar amounts. Be prepared to explain your answers.

Transcribed Image Text:

Error Example: Failed to record $200 of salaries owed at the end of the period 1. Failed to adjust prepaid insurance for $400 of expired insurance 2. Failed to record $500 of interest expense that had accrued during the period Effect of Error on: Net Owner's Revenues Expenses Income Assets Liabilities Equity N U N U $200 $200 $200 $200