An accountant made the following adjustments at December 31, the end of the accounting period:

a. Prepaid insurance, beginning, $500. Payments for insurance during the period, $2,000. Prepaid insurance, ending, $400.

b. Interest revenue accrued, $2,500.

c. Unearned service revenue, beginning, $1,700. Unearned service revenue, ending, $300.

d. Depreciation on building, $5,600.

e. Employees’ salaries owed for two days of a five-day work week; weekly payroll, $19,000.

f. Income before income tax, $21,000. Income tax rate is 35%.

Requirements

1. Journalize the adjusting entries.

2. Suppose the adjustments were not made. Calculate the overall overstatement or understatement of net income resulting from the omission of these adjustments.