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Problem 5 . 4 A ( Static ) Preparing a worksheet and financial statements, journalizing adjusting entries, and posting to ledger accounts. LO 5 -
Problem A Static Preparing a worksheet and financial statements, journalizing adjusting entries, and posting to ledger accounts. LO
Angela Mosley owns Innovative Designs. The trial balance of the firm for January X the first month of operations, is shown below.
Endofthemonth adjustments must account for the following items:
Supplies were purchased on January X; inventory of supplies on January X is $
The prepaid advertising contract was signed on January X and covers a fourmonth period.
Rent of $ expired during the month.
Depreciation is computed using the straightline method. The equipment has an estimated useful life of years with no salvage value.
Required:
Complete the worksheet for the month.
Prepare an income statement, statement of owners equity, and balance sheet. No additional investments were made by the owner during the month.
Journalize and post the adjusting entries.
Analyze
If the adjusting entries had not been made for the month, by what amount would net income be overstated or understated?
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