Backline Advertising creates, plans, and handles advertising campaigns in a three-state area. Recently, Backline had to replace an inexperienced office worker in charge of bookkeeping because of some serious mistakes that had been uncovered in the accounting records. You have been hired to review these transactions to determine any corrections that might be necessary. In all cases, the bookkeeper made an accurate description of the transaction.

R1Record the correct journal entry for any incorrect entries- do not "adjust" the entry as recorded but rather record a replacement entry

R2: For each of the preceding entries, indicate the effect of the error on cash, total assets, and net income. The answer for the first transaction has been provided as an example.

3. What is the correct balance of cash if the balance of cash on the books before correcting the preceding transactions was $6,300?

4. What is the correct amount of total assets if the total assets on the books before correcting the preceding transactions was $20,000?

5. What is the correct net income for May if the reported income before correcting the preceding transactions was $9,000?

A1 D 300 300 5,000 5,000 1,000 1,000 A 1 May 1 Accounts receivable 2 Service revenue 3 Colected an account receivable. 4 5 2 Rent expense 6 Cash 7 Paid monthly rent $500. 8 9 5 Cash 10 Accounts receivable 11 Collected cash for services provided. 12 13 10 Supplies 14 Accounts payable 15 Purchased office equipment on account. 16 17 16 Dividends 18 Cash 19 Paid salaries. 20 21 25 Accounts receivable 22 Cash 23 Paid for supplies purchased earlier on account. 24 2,500 2,500 2,000 2,000 1,500 1,500