O ADJUSTING ENTRIES Effects of adjusting entries on financial statements: Problem typ.... Evans Company's employees earn $510 per day and are paid on Friday for a five-day work week. This year, December 31 is a Tuesday. If the appropriate adjusting entry is not made at the end of the year, what will be the effect on: (a) Income statement accounts (overstated, understated, or no effect)? (b) Net.income (overstated, understated, or no effect)? (C) Balance sheet accounts (overstated, understated, or no effect)? Income Statement Accounts Bevenue Understated Expense Understated Net Income Overstated Balance Sheet Accounts Assets Understated Understated Retained Earnings Understated