PROBLEM #3

The following are the recent Income Statement and the Balance Sheet of Zaman Inc. in condensed formats:

Unadjusted Adjusted

Sales revenue	$ 500,000
Cost of goods sold	300,000
Gross profit	200,000
Operating expenses	100,000
Income before interest and taxes	100,000
Interest expense	20,000
Net Income	$ 80,000
Current Assets	$ 300,000
Equipment	1,425,000
Accumulated depreciation equipment	(450,000)
Equipment (net)	975,000
Total Assets	$ 1,275,000
Current Liabilities	$ 205,000
Long-term bank loan	500,000
Common shares	400,000
Retained earnings	170,000
Total liabilities and shareholders equity	$ 1,275,000

A Review conducted by the Auditor revealed that the following:

A credit sale made at the very end of the year in the amount of $30,000 was not recorded. The Cost of Goods associated with the sale was $20,000.

Annual Depreciation of $50,000 was not recorded.

Decembers electricity bill in the amount of $2,000 was received. However, it was not recorded.

Required:

How are the Accounts in the above Income Statement and Balance Sheet affected by the three (3) items listed above?

Answer the Question by inserting the correct Balance of each Account, (regardless of whether or not it is affected by the auditors findings), in the Right hand column entitled Final Bal provided above. Ensure that you place all account balances in this column.

Ignore the effect of Income Taxes. Journal Entries are not required, but may be helpful to arriving at your answers.

ROBLEM #3 The following are the recent Income Statement and the Balance Sheet of Zaman Inc. in condensed formats: Unadiusted Adiusted ales revcnuc 500,000 300,000 200,000 100,000 100,000 20,000 S80,000 ost of goods sol ross profit perating expenses ncome before interest a taxes nterest expense et ome urrent Assets quipmcnt cumulated depreciation- equipment quipment (net ets urrent Liabilities ong-term ann on res earnings ties and share ers' equity A Review conducted by the Auditor revealed that the following: 1. A credit sale made at the very end of the year in the amount of $30,000 was not recorded. The Cost of Goods associated with the sale was $20,000. 2. Annual Depreciation of S50,000 was not recorded 3. December's electricity bill in the amount of $2,000 was received. However, it was not recorded Required: How are the Accounts in the above Income Statement and Balance Sheet affected by the three (3) items listed above: Answer the Question by inserting the correct Balance of each Account, (regardless of whether or not it is affected by the auditors' findings), in the Right hand column entitled "Final Bal provided abov e. Ensure that you p lace all account balances in this column. Ignore the effect of Income Taxes. Journal Entries are not required, but may be helpful to arriving at your answers