General Concepts

In each of the following questions, you have transactions that were either "missed" or wrong in the annual financial statements ending on December 31^st.

Indicate the amounts involved and the effects on each of the accounts listed, using the following notation:

overstated (O), understated (U) or no effect (NE)

Each transaction is independent (i.e., the first transaction does not affect the second, etc...).

For each question be sure to show by what amounts the financial statements are wrong before the corrections are made for the forgotten or mistaken transactions.Ignore any tax effects.

Record these transactions in a transaction worksheet.

3.On December 31^st, Spyros Alarm Clocks Corp. borrowed $50,000 from a bank. This amount has to be repaid in 6 months.It used this money, along with $40,000 of its own money, to purchase a piece of machinery for its factory for $90,000.It forgot to record any entries for either of these transactions.

Current Assets

Long-term assets

Current Liabilities

Long-term liabilities

Capital Stock

Retained Earnings

Net Income