Question
Identify types of adjustments and accounts before adjustment. LO3, 4 Zimbabwe Ltd accumulates the following adjustment data at 30 June: (a) Services provided but not
Identify types of adjustments and accounts before adjustment. LO3, 4 Zimbabwe Ltd accumulates the following adjustment data at 30 June: (a) Services provided but not yet invoiced total $600. (b) Store supplies of $300 are on hand. Supplies account shows $2300 balance. (c) Electricity expenses of $225 are unpaid and unrecorded. (d) Service for which payment of $260 was collected in advance has been performed. (e) Salaries of $800 are unpaid and unrecorded. (f) Benefits arising from prepaid insurance totalling $350 have expired. Required (a) For each item indicate (1) the type of adjustment (prepaid expense, revenue received in advance, accrued revenue or accrued expense) and (2) the accounts before adjustment (overstatement or understatement). (b) Calculate the effect on profit if the adjustments were not recorded.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started