Adjusting Entries and Errors

At the end of June, the first month of operations, the following selected data were taken from the financial statements of Beth Cato, an attorney:

Net income for June	$108,700
Total assets at June 30	605,000
Total liabilities at June 30	200,000
Total owner's equity at June 30	405,000

In preparing the financial statements, adjustments for the following data were overlooked:

1. Unbilled fees earned at June 30, $7,430.
2. Depreciation of equipment for June, $3,300.
3. Accrued wages at June 30, $2,380.
4. Supplies used during June, $2,080.

1. Journalize the entries to record the omitted adjustments.

a.
b.
c.
d.

2. Determine the correct amount of net income for June and the total assets, liabilities, and owner's equity at June 30. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table below. Use the minus sign to indicate decreases. If an effect is zero, enter "0". Adjustment (a) is presented as an example.

Net Income

Total Assets

=

Total Liabilities

+

Total Owner's Equity

Reported amounts

$108,700

$605,000

$200,000

$405,000

Corrections:

Adjustment (a)

+7,430

+7,430

0

+7,430

Adjustment (b)

Adjustment (c)

Adjustment (d)

Corrected amounts