3.4

2. Fill in the blanks:

recorded/unrecorded

casho cash

overstated/understated

overstated/understated

overstated/understated

overstated/understated

Acerued Revenue Adjusting Entries Powers Rental Service had the following items that require adjustment at year end. a. Earned $9,070 of revenue from the rental of equipment for which the customer had not yet paid. b. Interest of $750 on a note recelvable has been earned but not yet received. Required: 1. Prepare the adjusting entries needed at December 31 . If an amount box does not require an entry, leave it blank. Dec. 31 Dec. 31 2. What is the effect on the financial statements if these adjusting entries are not made? In both of these cases, the adjusting entries record a previously Irevenue for which the performance obligation is satisfied (the revenue has been earned) but for which has yet been received (acerued revenue). If these adjusting entries were not made, both assets and revenues would be fon the financial statements. In addition, because revenue is , net lncore is Finaly, because revenue subsequently closed to retained earnings, stockholders' equity will also be