Question content area top

Part 1

Ricardo Advertising creates, plans, and handles advertising campaigns in three provinces. Recently, Ricardo had to replace an inexperienced office worker in charge of bookkeeping because of some serious mistakes that had been uncovered in the accounting records. You have been hired to review these transactions to determine any corrections that might be necessary. In all cases, the bookkeeper made an accurate description of the transaction but did not correctly record the transaction in the journal.

Journal Entry \begin{tabular}{lccc} \hline Date & Accounts and Explanations & Debit & Credit \\ \hline May 1 & Accounts Receivable & 1,300 & \\ & Service Revenue & & 1,300 \end{tabular} Collected an account receivable. May 2 Rent Expense 12,000 Cash 12,000 Paid monthly rent, \$1,200. May 5 Cash 3,000 Accounts Receivable 3,000 May 10 Supplies 4,100 Accounts Payable 4,100 Purchased office equipment on account. May 16 Dividends 5,900 Cash 5,900 Paid salaries. May 25 Accounts Receivable 4,600 Cash 4,600 Paid for supplies purchased earlier on account. Requirement 1. For each of the preceding entries, indicate the effect of the error on cash, total assets, and net income. The answer for the first transaction has been provided as an example. (If the error has no effect, select "Correct" and leave the amount cell blank.) Requirement 2. What is the correct balance of cash if the balance of cash on the books before correcting the preceding transactions was $6,900 ? What is the correct cash balance? Requirement 3. What is the correct amount of total assets if the total assets on the books before correcting the preceding transactions was $25,000 ? What is the correct amount of total assets? Requirement 4. What is the correct net income for May if the reported income before correcting the preceding transactions was $13,000 ? What is the correct net income for May