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On December 31, Ferron Company prepared an income statement and balance sheet and missed the following information. The income statement, prepared on this incorrect basis,
On December 31, Ferron Company prepared an income statement and balance sheet and missed the following information. The income statement, prepared on this incorrect basis, reflected pretax income of $69,000. The balance sheet on this incorrect basis reflected total assets, $166,000; total liabilities, $84,000; and stockholders' equity, $82,000. The data follows: a. Wages amounting to $38,000 for the last three days of December were not paid and not recorded (the next payroll will be at the beginning of next year). b. Depreciation of $9,000 for the year on equipment that cost $166,000 was not recorded. c. Rent revenue of $8,100 was collected on December 1 of the current year for office space for the period December 1 to February 28 of the next year. The $8,100 was credited in full to Unearned Rent Revenue when collected. d. Income taxes were not recorded. The income tax rate for the company is 30 percent. Required: Complete the following tabulation to correct the financial statements for the effects of the four errors if necessary. (Amounts to be deducted should be indicated with a minus sign.) Items Net Income Total Assets Total Liabilities $ 84,000 Stockholders' Equity $ 82,000 $ 69,000 $ 166,000 Balances reported Additional adjustments: Wages Depreciation a. b c. Rent revenue Adjusted balances d. Income taxes Correct balances
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