Unadjusted Financial Statements These financial statements were prepared from the unadjusted trial balance. Cole Designs Inc. Income Statement For the Year Ended December 31, 2013 Fees earned $69,000 Wages expense (44,900) Net income $24,100 Cole Designs Inc. Balance Sheet December 31, 20Y3 Assets Cash Accounts receivable Supplies Prepaid insurance Office equipment Total assets Liabilities Unearned fees Stockholders' Equity Common stock Retained earings Total liabilities and stockholders' equity 55,750 31,800 3,525 4,600 11,000 556,675 $9.200 $12.000 35,475 47.475 $56,675 Adjusted Financial Statements These financial statements were prepared from the adjusted til balance Cole Designs Inc. Income Statement For the Year Ended December 31, 2043 Fees earned 574,650 Expenses Wages expense $47.350 Supplies expense 3.415 Insurance expense 3.200 Depreciation expense 1.600 Total expenses (55.555 Net income $19.085 $5,750 32,350 110 1,400 Cole Designs Inc. Balance Sheet December 31, 2013 Assets Cash Accounts receivable Supplies Prepaid insurance office equipment Accumulated depreciation-office equipment Total assets Liabilities Wages payable Unearned fees Total liabilities Stockholders' Equity Common stock Retained earnings Total liabilities and stockholders' equity $11,000 (1,600) 9,400 $49,010 $2,450 4,100 $6,550 $12,000 30,460 42,460 $49,010 Accounting Bases Under which basis of accounting would adjusting entries never be recorded? Which accounts would most likely not be used under the cash basis of accounting? a. Supplies Expense b. Unearned Fees c. Accounts Payable d. Revenue e. Accounts Receivable f. Cash Matching Principle/Revenue Recognition Under the accrual basis of accounting, many of the account balances in the ledger at the end of the business is divided into time periods. The matching principle states that Under the accrual basis of accounting, the revenue recognition principle states that Review the following selected transaction data of a business for April. Keeping the matching prin a. Cash paid in April for expenses incurred in May. b. Cash paid in April for expenses incurred in April. c. Cash received in April from customers for services performed in May. d. Expenses incurred in April but not paid until June. e. Services provided to customers on account during April f. Cash received from cash customers for services performed in April. Overstated, Understated Assume that the Cole Designs Inc. financial statements in the Unadjusted Financial Statements pe For the following financial statement items, indicate Yes or No if the item was overstated, underst Overstated Understated Neither Net income Stockholders equity Revenues Total assets Total expenses Total liabilities