E4-16 through E4-18 (Static) Recording Four Adjusting Journal Entries, Preparing an Adjusted Trial Balance, Reporting an Income Statement, Statement of Retained Earnings, Balance Sheet and Recording Closing Entries [LO 4-2, LO 4-3, LO 4-4, LO 4-5]

Skip to question

[The following information applies to the questions displayed below.]

Mint Cleaning Incorporated prepared the following unadjusted trial balance at the end of its second year of operations ending December 31. (Assume amounts are reported in thousands of dollars.)

Account Titles	Debit	Credit
Cash	$38
Accounts Receivable	9
Prepaid Insurance	6
Equipment	80
Accumulated Depreciation		$0
Accounts Payable		9
Salaries and Wages Payable		0
Income Tax Payable		0
Common Stock		76
Retained Earnings		4
Sales Revenue		80
Insurance Expense	0
Salaries and Wages Expense	10
Supplies Expense	26
Income Tax Expense	0
Totals	$169	$169

Other data not yet recorded at December 31:

1. Insurance expired during the year, $5.
2. Depreciation expense for the year, $4.
3. Salaries and wages payable, $7.
4. Income tax expense, $9.

E4-16 (Static) Part 3

3. By what amount would net income have been understated or overstated had the adjusting journal entries not been recorded? (Enter your answers in thousands of dollars.)

How do I find if net income will be over or understated and by what amount? How do I calculate this?

E4-16 through E4-18 (Static) Recording Four Adjusting Journal Entries, Preparing an Adjusted Trial Balance, Reporting an Income Statement, Statement of Retained Earnings, Balance Sheet and Recording Closing Entries [LO 4-2, LO 4-3, LO 4-4, LO 4-5] [The following information applies to the questions displayed below.] Mint Cleaning Incorporated prepared the following unadjusted trial balance at the end of its second year of operations ending December 31. (Assume amounts are reported in thousands of dollars.) Other data not yet recorded at December 31: a. Insurance expired during the year, $5. b. Depreciation expense for the year, $4. c. Salaries and wages payable, $7. d. Income tax expense, $9. 16 (Static) Part 3 By what amount would net income have been understated or overstated had the adjusting journal entries not been recorded? Enter your answers in thousands of dollars.)