2. Below are 4 adjusting journal entries (AJEs) that another firm, Wolverine, failed to make at year end. For each entry NOT MADE indicate the effect that each omitted AJE would have on the Wolverines financial statements for the year ended 12/31/2021. Use O for overstated, U for understated, and NE for no effect. Organize your answer in tabular form, using the column headings shown below and provided in the worksheet titled Part A, Question B.

Example 0: At year end, Wolverine failed to make the below AJE to record that fact that employees earned $4,000 in wages which will be paid on the next payroll date in January 2022.

Compensation Expense (+E, -NI, -R/E, -SE) 4,000

Salaries Payable (+L) 4,000

If that adjustment was not made expenses and liabilities would be understated by $4,000. If expenses are understated, then Net Income and Stockholders Equity will be overstated.

	Income Statement				Balance Sheet
Adjusting entry	Revenue -	Expense	= Net Income		Assets =	Liabilities +	Stockholders Equity
Example 0	NE	U	O		NE	U	O

AJE #1: At year end, Wolverine failed to make the below AJE to record that Wolverine had some debt that had accrued interest of $900.

Interest Expense 900

Interest Payable 900

AJE #2: At year end, Wolverine failed to make the below AJE to record that Wolverine performed $4,200 in services in December that had been prepaid by the customer in November. Note that when the services were paid for in November, Wolverine increased (debited) cash and increased (credited) Unearned Service Revenue, a liability account.

Unearned Service Revenue 4,200

Service Revenue 4,200

AJE #3: At year end, Wolverine failed to make the below AJE to record depreciation of $1,800.

Depreciation Expense 1,800

Accumulated Depreciation 1,800