O ADJUSTING ENTRIES Effects of adjusting entries on financial statements: Problem typ... On January 2, Ramirez Company paid $42,900 to purchase equipment that has a useful life of 11 years. The equipment will be depreciated equally over the 11- year period as depreciation expense. The cost of $42,900 is divided by the useful life of 11 years to determine the amount of the yearly depreciation expense of $3,900. 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)? (6) Net Income (overstated, understated, or no effect)? (c) Balance sheet accounts (overstated, understated, or no effect)? Income Statement Accounts Revenue Choose ne Ex Choose One Net Income Choose One lance Sheet Accounts Assis Choose One Lab Choose One damist Choose One Explanation Check