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Adjustment for Depreciation

The estimated amount of depreciation on equipment for the current year is $133,000.

a. How is the adjustment recorded? Indicate each account affected whether the account is increased or decreased, and the amount of the increase or decrease.

	Account	Increase/Decrease	Amount
	Depreciation expense	increasedecreaseincrease	$fill in the blank 2
	Accumulated depreciation	increasedecreaseincrease	$fill in the blank 4

b. If the adjustment in (a) was omitted, which of the following items would be erroneously stated on the income statement for the year and the balance sheet as of December 31?

	Account	Overstated/Understated	Financial Statement
	Depreciation expense	overstatedunderstated	Balance sheetIncome statement
	Net income	overstatedunderstated	Balance sheetIncome statement
	Accumulated depreciation	overstatedunderstated	Balance sheetIncome statement
	Total assets	overstatedunderstated	Balance sheetIncome statement
	Stockholders' equity (retained earnings)