and the Quaity of 234 CRITICAL THINKING CASES Uaing ied Mogl year. tThe three sof a serlosnse given to the bank the eod of te during the fire in operation since January 1, 2017. It is now D the company, but the CP4-1Uning rinaarial Reports, Evaluating Financial Information-, Bank they have were prepared by a clerk and then were given to MAGLIOCHETTI MOV Statement of Financial Position of Earnings 1, 2017 $12.000 17,000 Salaries espense 12.000 Inventory of maintenance supplies other espenses er assets 47.000Prepaid expenses $38.000 Orher Total expenses Net eamings $82.000 STotal assets a5.0 38000 Contributed capital (10,000 shares outstanding) Retained eamings Total liabilities and shareholders equity After briefly reviewing the statements and looking into the situation, you requested that the statements be redone (with some expert help) to "incorporate depreciation, accruals, counts, income taxes, and so on. As a result of a review of the records and supporting the following additional information was developed: a. The inventorg of maintenance supplies of $6,000 shown on the statement of financial not been adjusted for supplies used during 2017. An inventory count of the maintenance lies used should be debited to on hand (unused) on December 31, 2017, showed $1,800. Suppl b The insurance premium paid in 2017 was for 2017 and 2018; therefore, the prepaid insurance at December 31, 2017, amounted to $2,000. The total insurance premium was debited to prepaid insurance when paid in 2017 e. The equipment cost $40,000 when purchased January 1,2017. Depreciation expense of $5,000 not been recorded for 2017. d. Unpaid (and unrecorded) salaries at December 31, 2017, amounted to $2,200. e. At December 31, 2017, transportation revenue collected in advance amounted to $7,000. This amount was credited to transportation revenue when the cash was collected . The compang is subject to an income tax rate of 30 percent. Required: 1. Record the six adjusting entries required on December 31, 2017, based on the preceding add information. 2 Recast the preceding statements after taking into account the adjusting entries. Use the foll format for the solution Amounts Reported Plus (List here each item from the two statements) 3. Omission of the adjusting entries caused the following: a. Net earnings to be overstated or understated (select one) by b. Total assets to be overstated or understated (select one) by S