Effects of errors on financial statements

The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($19,890) and (b) accrued wages ($6,990).

Indicate the effect of each error, considered individually, on the income statement for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet.

Enter all amounts as positive numbers. Enter "0" in those spaces where there is no overstatement or no understatement.

Error (a) The adjusting entry for unearned revenue earned during the year ($19,890) was omitted.

Line Item Description	Overstated	Understated
1. Revenue for the year would be	$fill in the blank 1	$fill in the blank 2
2. Expenses for the year would be	$fill in the blank 3	$fill in the blank 4
3. Net income for the year would be	$fill in the blank 5	$fill in the blank 6
4. Assets at July 31 would be	$fill in the blank 7	$fill in the blank 8
5. Liabilities at July 31 would be	$fill in the blank 9	$fill in the blank 10
6. Stockholders' equity at July 31 would be	$fill in the blank 11	$fill in the blank 12

Error (b) The adjusting entry for accrued wages ($6,990) was omitted.

Line Item Description	Overstated	Understated
1. Revenue for the year would be	$fill in the blank 13	$fill in the blank 14
2. Expenses for the year would be	$fill in the blank 15	$fill in the blank 16
3. Net income for the year would be	$fill in the blank 17	$fill in the blank 18
4. Assets at July 31 would be	$fill in the blank 19	$fill in the blank 20
5. Liabilities at July 31 would be	$fill in the blank 21	$fill in the blank 22
6. Stockholders' equity at July 31 would be	$fill in the blank 23	$fill in the blank 24