Concept explainers
Exercise 3-55
Effect of Adjustments on the Financial Statements
VanBrush Enterprises, a painting contractor, prepared the following
a. Wages Expense ................ 2,550
Wages Payable 2,550
b. Accounts Receivable ....... 8,110
Service Revenue .............. 8,110
c. Unearned Service Revenue ………………… 5,245
Service Revenue ………..... 5.245
d. Rent Expense ............. 3,820
Prepaid Rem .......... 3,820
Required:
1. Show the effect of these adjustments on assets, liabilities, equity, revenues, expenses, and net Income.
2. CONCEPTUAL CONNECTION If these adjustments were made with estimates that were considered conservative, how would this affect your interpretation of earnings quality?
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Cornerstones of Financial Accounting
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