Accounting Adjustments Practice Quiz The following are selected balances before adjustment at December 31, 2020: Debit Credit 75,000 250,000 12,000 12,000 3,170 AR Equipment Accumulated Depreciation- Equipment Prepaid Rent Supplies Wages Payable Unearned Fees Fees Eamed Wage Expense Rent Expenes Supplies Expense Depreciation Expense 0 10,000 400,000 140,000 0 0 0 Required: 1. Journalize the year end adjustments using the information below: 1. Supplies on hand at December 31, 5550. 2. The equipment has a useful life of 10 years and is depreciated on a straight- line basis with no residual value. 3. Twelve months of rent was prepaid on July 1. 4. Wages are paid weelky on Friday. Wages to be paid on January 2 are $2,500 for the 5-day workweek 5. Or the unearned fees, 65% was earned as of December 31. 6. Unbilled fees for services performed as of December 31 were $7.200. II. Please answer the following questions: A. What was the net effect on Net Income of the above adjustments? B. Assume adjustment #3 above was omitted. What is the effect on Assets, Liabilities Stockholder's Equity, Revenue and Expense (overstated understated)? C. What accounting principles require the use of adjustments? From a business point of view, why are adjustments necessary? Assume you are a stock analyst and are evaluating the sales growth and profitability estimates for a company. How would the matching principle be applicable in this case? 0